by Travis Johnson, Stock Gumshoe | January 15, 2015 12:10 pm
A quickie for the gold[1] enthusiasts to discuss today, since several folks have asked about this “special gold fund” in the last week.
And yes, it’s not a super-hard one… but it’s pretty timely, and I thought it might be worth batting it around a bit.
Here’s the snippet from Stansberry that I got from readers, I haven’t seen the actual email or ad from Stansberry on this one:
“Last week in DailyWealth Trader[2], Brian noted the extreme pessimism in gold stocks and their recent breakout. He recommended going long a special gold fund… It holds the 25 gold stocks that are most sensitive to changes in the gold price. It ranks them according to low debt levels and high revenue growth… And it weights those stocks based on its rankings.”
This is a new gold miners ETF that was launched by Sprott last year, Sprott Gold Miners ETF (SGDM)[3], and it is indeed designed to focus much more on the “best” gold miners. Here’s what yours truly wrote about it back in October[4] when I mentioned it as part of a general update for the Irregulars on some gold stocks of interest:
“For those interested in speculating on gold miners or gold equities as gold trundles along at these low prices (bottoming? I don’t like that term — it implies you know what’s going to happen in the future… but it has certainly been in a relatively tight range over the last year or so following the huge collapse in gold to the $1,200 neighborhood), I’d suggest that safer ways to play the macro trend are probably the ETFs if you don’t want to build a basket of royalty and high-quality mining stocks yourself. I particularly like the new ETF from Sprott, though it’s not really been tested yet.
“That ETF, the Sprott Gold Miners ETF (SGDM) essentially takes a basket of 25 of the large and midsize gold stocks who have historically been most influenced by gold prices (higher “beta” to gold prices), then weighting those 25 to put more into the stocks with better balance sheets and better revenue growth. This ‘active indexing’ is rebalanced quarterly, and it makes sense to me as a way to weight the better-performing and safer stocks that will react well if and when gold goes up… and yes, Franco-Nevada is the largest holding at more than 15% of the portfolio. And though it is an “active” ETF, it carries essentially the same expense ratio as the dominant gold mining[5] index, the Market Vectors Gold Miners ETF (GDX)[6].”
During those three months, SGDM and GDX have tracked pretty much identically with each other and are up about 3-4%, with the price of gold (as represented by the GLD ETF) up a little less than 2%. Since SGDM was launched in July it is ahead of GDX by about one percentage point (down only 17% versus 18% for GDX), and both are down far more than GLD (which is about 3% lower than it was six months ago). If Dailywealth Trader recommended it last week they’re probably up between 5-10% on it right now, within a few split hairs of where GDX traders would be during the same time period.
So the jury’s certainly still out, but there is almost always substantial leverage[7] in the gold miners when the price of gold moves — so both SGDM and GDX have rocketed up over the last month (SGDM up 28%, GDX up 25%) as gold as jumped up by 5% or so. One tiny bit of evidence that their “active indexing” to choose stocks with better historic leverage to gold prices has generated some excess returns in a good month, though you wouldn’t want to write that in stone for an index that’s been around for less than a year. They have rebalanced at least once since I wrote about it in October, so Franco-Nevada is no longer the largest holding — Randgold has edged them out by a hair.
This fund should continue to be more volatile than GDX, if only because their top three holdings (Randgold, Franco-Nevada, and Goldcorp) are about 45% of the fund. The top three for GDX (Goldcorp, Barrick and Newmont) are about 25% of that fund.
So, I’d probably still pick SGDM over GDX for gold mining exposure (I don’t own either at the moment) — but that’s slightly risky since it’s a new fund and it isn’t as diversified… and presumably, picking stocks that they expect to be more levered to gold prices means they will go down faster if gold falls sharply again (though both SGDM and GDX will stink if gold falls sharply, so that’s splitting hairs to some degree). The difference between the two has so far been slight, and the last six months indicates that it’s not likely to be worth too much time parsing the differences or worrying over which is better, but it is somewhat encouraging that SGDM has reacted well to gold’s good month. You can explore SGDM a bit on the Sprott website here[8] if you’re curious. GDX is dramatically larger and trades with far more volume, but both have stuck to NAV as far as I’ve seen (no significant premium or discount).
Today’s move, the 5% jump in pretty much all of the gold miners, is mostly a reaction to the Swiss surprise[9] that caused a bit of a safe-haven rush to gold in Europe and drove gold up about 3% — so whether it sticks or not is definitely an open question.
Think you’ll be best off with gold miners, with a particular gold mining ETF, or with physical ownership of the yellow stuff itself? Or perfectly happy to ignore the “barbarous relic” entirely? Let us know with a comment below.
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i can see people taking silver dimes for loaves of bread in hyperinfaltionary times, i cant really see giving up kruggerands for a tank of gas during that type of event though…
Imagine what each of those King George VI Canadian silver dollars I got for top grades in school some years back will buy when the time comes!
I recall that my parents thought it extravagant at the time to spend a whole dollar for each of those miniature manhole covers. How little they knew.
If someone had a precious metals etf that had a strategy of picking viable mining companies that would leverage higher as precious metals rise, it would be interesting. There must be companies that have large deposits of gold that are uneconomic to mine at present values and that should enjoy great leverage when prices rise.
In the meantime, I don’t need Sprott to find good streaming and royalty companies. If nothing else, I could just read the Gumshoe Detective.
(SAND)
(ASM)
Good on you Rusty! Personally though, I don’t want to deal with the security problems of storing valuables at home. I like Sprott’s precious metal funds, all of them – the gold and silver ETFs are fully allocated, and I’d rather keep PMs in Canadian vaults than in any U.S. vault (I just trust the Canadians a bit more to not resort to repressive measures like seizure and hope they never prove me wrong!).
I tend to listen most to those who correctly predicted the U.S. financial crashes over the last 25 years (which are happening at closer intervals and increasing in intensity each time). I’ve long been convinced they are correct in saying that the basic cause of our economic volatility and instability is this now world-wide experiment of using only fiat currencies. Governments and central banks, naturally, favor currencies which are backed by nothing tangible, and so can be created without limit – and so can increase their spending and debt without limit. This system also forces countries to try to “win” against trading partners by devaluing their currencies against each other. Everyone loses in the long run.
Government and central banks’ “intervention” in the markets actually becomes just government control of markets. Look at how investors and traders hang on and react to every word uttered by a central banker, or even small government policy changes! Things were not always like this – and should not be like this now.
I’m not saying put all your money into gold, build a bunker, and hide there with stockpiled ammunition. I do believe in Buffet-style value investing. But it’s also important to listen to reasonable people, like James Rickards, who advises keeping at least 10% of your assets in precious metals. Then if/when a bad really crash occurs, and 90% of your paper assets fall, that 10% in gold and/or silver will rise enough to make up for it. He also warns though that government, if ever it returned to a gold standard, might then hit gold owners with a 90% “windfall tax”. Another thing to keep in mind is that in really bad times precious metals can go into a bubble of its own (skyrocket into a temporary high), so if they do then use that opportunity to purchase other real assets like real estate bargains (people in debt who are forced to sell off some real estate – even productive real estate – because they don’t have enough “money”, which you will…). Interestingly, after Germany’s hyperinflation episode of the early 1920’s, the first replacement currency was backed, indirectly, by land – then later they returned to gold. Both worked because the public had confidence in them. (Too bad it worked as well as it did actually, considering what Germany did soon after with their new industrial might…)
We really need to end up with a new global currency backed by tangibles. Money has got to have real, intrinsic value of its own in order for any exchange involving it to actually BE a fair exchange. The supply of money can’t be either limitless, as fiat currencies are now, or too restrained, like it was during the Great Depression (the Fed has been responsible for both extremes). Money supply simply needs to track with a healthy rate of economic expansion. We need to elect people who understand that.
A better explanation would be hard to find.
Good article Patricia. I think I’m about right in saying that the M2 money supply in USA and Europe is somewhere between 2-4% of its gold reserves. If Russia ( and maybe include China in an axis), was to start backing the Rouble ( Yuan) with gold reserves, this could be a ‘weapon of mass financial destruction’. Countries that have huge debts, and expensive welfare systems would quake at Au/currency relationship. Will it, can it happen, probably not in the foreseeable future. The Rouble is presently backed by oil price, and that leads to another completely different debate. Readers may be interested to know that the terrorist state which calls itself ISIS has recently minted it’s own currency. Gold 1 & 5 Dinars, Silver Dirhams and Copper Fils. It’s ironic that the most contemptible effluent on the Planet are ahead in this game. All in MHO of course.
You make some good points. Those countries have openly stated that the U.S. dollar should not remain the world’s reserve currency – but right now they can’t force a change without hurting their own economies badly. That’s not to say they won’t – despots like Putin act on crazy motivations all the time with no care for how much it hurts their people.
As for ISIS, as I understand it they are just unthinkingly instituting Sharia law in every way, including going back to gold and silver. Too bad about the association problem – it gives a false argument those who want to say gold and silver are archaic and outdated.
Don’t disagree conceptually, but not sure how we function if 90% of paper assets fail. Even if all your metal assets go up ten times to offset the loss on paper, trying to buy you groceries and cable etc. will be very complicated.
And what about personal security. When it becomes known that you are one of the few with valuable assets while all your neighbors are bankrupt how does that society function?
A ten times increase will result in a silver dollar being worth about $120 and a gold eagle about $13,000. Hard to do commerce with this don’t you think?
What good is buying real estate at that point when 90% of the population has no paper assets. What does collecting rent look like?
And what about employers? Assuming that we have a somewhat functioning society how do you pay your people if there are no paper assets?
How does global commerce function if there are no paper assets? Electronic assets are gone.
Once you say ” a new global currency backed by tangibles….” you have the potential do wind up in the same place eventually don’t you? Backed up? How would you ever know? Do we really know what is at Fort Knox to “back up” the currency? Would you “trust” that all the other countries also diligent at backing up their currency?
I admit to being a rank amateur in these discussions, but I am not sure I want to live through the upheaval involved in getting through to the other side when this occurs.
When all current monies are worthless to the extent we have hyperinflation society may tear itself apart.
All great questions! I do think that the massive, absolutely unsustainable debt levels all over the world (both government and private debt) will eventually result in currency collapses. There’s just been far too much spending beyond our means – it’s that simple. But I don’t claim to be able to predict when it might happen, or how bad it might get.
In the past, when new world money systems were created, it was a somewhat simple process. The winners of wars, the most powerful, got to decide. Even when Nixon cut the cord on the gold standard, there was no other world power great enough to stop him. Things are different today – the U.S. is losing its ability to call all the shots.
Would world leaders be able to come together and agree on any new system? Maybe. Would enough confidence have been lost in fiat currencies to force leaders to back the world’s new reserve currency with something – metals, or a wider basket of commodities, or land? Hopefully.
In individual countries where currencies have failed, there was always a period of panic and terrible losses, until a new monetary system took hold. We can hope that a world-wide currency collapse will be brief and not cause too much chaos and suffering. But during such a time people would continue to value precious metals as an acceptable form of exchange, and I can’t see anything ever changing that (unless at some far, far distant point the transmutation of metals becomes technologically possible!).
I can’t edit my post mistakes apparently, so will point out this error: what Jim Rickards actually says is that in case 90% of YOUR other investments fall, you should keep 10% in gold. He wasn’t saying that 90% of all paper assets would fail or fall. Some investments, of course, would still be fine – including good gold mining stocks, which seem to have a history of at first crashing along with other stocks in a crashing stock market, and then skyrocketing. That could happen again – although next time, there may well be too many people aware of that history, so gold mining stocks might take right off in case of a financial panic. I certainly wouldn’t wait for them to crash before buying any.
Patricia; Can you give us the names of those individuals? ‘I tend to listen most to those who correctly predicted the U.S. financial crashes over the last 25 years ‘
I’ll try to keep this short because I’ve already gone overboard with my comments on this topic (that’s because I’ve been deeply interested in economics since 2006 – but only very interested in investing for two months!).
Here are just a few names out of many – people who were or are able and willing to recognize bubbles and predict that they would soon collapse:
1987 stock market crash: Martin E. Zweig
1999-2000 Internet stocks crash, and 2000’s real estate bubble: Professor Robert Shiller
2006-2008 real estate and stock market crash – David and Robert Wiedemer
It’s always worth taking a look at the writings of and interviews with those who went against the herd and turned out to be right – whether they’re still around or not. I apply this to all subjects, not just economics.
But I also had a friend during the mid 2000’s who is a big believer in Robert Kiyosaki’s financial philosophy, and who thought Mike Maloney’s projections were worth listening too. She told me to expect a crash within a few years – she was right, and she lost nothing, because much of her money had long been in good rental properties and precious metals.
It seems to be proven that trying to make a killing by timing the stock market doesn’t work very well. But recognizing basic economic weaknesses and the terrible fiscal policies which are making those weaknesses worse is something we should all care about. Though I don’t love the “Internet infomercial” pitches or high-priced newsletters James Rickards is associated with, and wish he’d just write books and be a TV financial commentator – I still think he’s very much the go-to guy when it comes to getting the current global economic/financial picture. He expects another round of QE from the Fed this year, regardless of what they’ve said – and that would likely drive the stock market back up again just like it has before. Let’s see if he’s right about that. (That’s assuming that the fallout from this Swiss move, or some other shock, doesn’t sink the markets in the coming weeks/months to such a low that another shot of QE heroin won’t help.)
I found a blog about James Rickards at http://jimrickards.blogspot.com/ .
Interesting comments.
Patricia; Thanks a lot for all your comments on this thread. Very well written.
Patricia,
al is correct-and reflective of lots of reading. Have u been able to apply all that time into scoring big profits from the market?
Just saw your comment today Bob – I’m a small investor and don’t know what you’d consider big profits, but I’m very pleased with the ones I’ve had since signing up here. I’m trying to carve out a corner for those of us very interested in this subject, who want to keep the conversation going for as long as anyone cares:
Bob, the link is:
http://www.stockgumshoe.com/2015/02/microblog-the-time-machine-whats-the-best-way-to-protect-ourselves-against-the-next-market-crash/
This is the same stock that was recommended by True Wealth a Stansberry publication a few months ago and we got stopped out on it. It seems to me that a lot of times the same stock that stopped out on one publication at Stansberry is recommened by another Stansberry publication, I guess eventually you might hit the mark
Carl, you may have discovered what I like to refer to as the “Stansberry Shuffle”. They indeed claim that their various publications sometimes don’t agree with each other. This is the case with the “don’t buy anything oil” comment that was mentioned in today’s “Daily Weatlh”. But what I’ve noticed is that a publication of theirs with a large number of positions getting stopped out may get dropped or folded into another one, which is renamed, such as the possibly misnamed “Income Intelligence”, which in Nov 2014 listed no fewer than five oil & gas “buys”. Needless to say, my subscription has made them richer than it has made myself.
True Wealth has just re-recommended it.
HI Travis,
Good work. That is the one.SGDM. I have bought about 4% of my capital into SGDM.
The way ahead for me is to hold some gold ETF. The US dollar will inevitably collapse.
The Chinese know this and are buying up more gold than any other nation.
The world economies are becoming increasingly indebted,; one day it will end in a roar.
The USA’s debt payments are getting nearer the total of it’s export receipts!, not further away.
That’s a very logical way to look at it — unfortunately, that was also the logical outcome a decade ago and there are many, many moving parts that confound the logical assumption.
You are so right – many, many moving parts. When all logical assumptions are being continually confounded, I think it’s best to be ready at all times for anything. Thank you Travis for spotlighting this ETF and this subject, and your timing was excellent. I am brand new to stock investing – after a lifetime of struggling just to make a living, a small recent windfall got me interested in looking at possibilities beyond precious metals. It was great to find your site, because sane, honest and impartial analysis seems to be hard to find in the investing world. (I like Warren Buffett’s recent quote about the market being like a “drunken psycho” – to that I’d add that too many in government and banking behave like mean-spirited addicts. Not a good combination.)
Travis you are so right,,,too many parts to keep track of. The true backing of the $ is ” The full faith and credit of the US Govt” which ultimately means the power to tax the wealth and productivity of US residents as well as the vast amount of wealth contained in “public lands” including all the wilderness areas and park systems. Faith and credit that the Govt. will not renege on its promises is however another thing entirely. IMHO of course.
frank
bought it at $16.65 a few weeks ago and it’s up over $20, can’t complain there! Not sure if it’s something I’ll hold long term, but I’ll keep riding it until I stop out!
The Chinese are buying gold partly because they hate dollars conjured up out of thin air and it’s easy to store. But it’s really irrational for individuals to own or trade it…you can’t eat it, drive it or text with it…and there are cheaper paperweights.
You’re missing the point, quincy. You can’t eat or drive paper money, or text with it. Same with stock certificates and ones and zeroes on someone’s system that represent them. There’s only one test: what has done better over time – gold or paper money?
You cant eat or drive gold either….both are representative of a value; both are tangible. But have you ever tried wiping your butt with a 60lb paperweight ? As for which has done best; it all depends what you did with it over which period of time. If you bought blue chips in 2008, and gold as a store of wealth (ha ha), by now the paper would be worth a heck of a lot more. In actual fact, there are very few decades where gold has beaten the stock market (which is bought with paper money). Gold ONLY has a value because of some antique gentleman’s agreement. These days, its teeth, paperweights and wedding rings.
Sure, gold is useless. Care to explain why the world’s central banks keep it in their vaults and are accumulating it? Yes, the world’s uber-rich keep that antique gentleman’s agreement alive (as secretly as possible. wouldn’t want the middle class riff-raff to benefit from owning a little gold in case things blow up again.)
QA, Methinks you have been drinking too much of the Fed’s Keynesian Koolaid! I suggest you drink deeply from the well of Austrian economics. You may find the wisdom of Ludwig von Mises especially quenching. Patricia knows of what she speaks. BTW, above ground silver is three times as rare as gold due to its industrial uses and is virtually certain to eventually outperform gold in almost any economic scenario.
Hi SG,
Thanks, but did you forget to write Irregulars Quick Take?
Hi SG,
Economists are talking about impending market crash. Indicators listed are:
a) low EPS
b) high P/E
c) Unbalanced Optimism
d) High VIX on the average
e) Index climbs by over 100 % of average expected value. When it does the index will reduce to 50 % of average expected value
http://www.moneynews.com/MKTNews/Market-Collapse-Finance-Stocks/2013/03/01/id/492699/
Is there a better way to find out any forewarnings before an imminent crash ?
Any ideas on these ?
Greatly appreciate it.
Thanks,
s_t
That’s not “economists,” it’s “an “economist” and it’s in the context of an ad pitch for a newsletter. His prediction is obviously severe, including 100 percent inflation this year, and that means he’s not trying to make an educated guess: he’s trying to catch your attention.
There are lots of reasons why the market might go down, It’s generally a bit expensive by some measures (and perfectly reasonable by others), and expectations and sentiment have gotten fairly high for the first time in several years.
There are also plenty of reasons why the market might go up — starting with the fact that the US$ and the US Market remain compelling versus most of the competition, and there’s a lot of money that has to be somewhere. Volatility will probably be high for the next month or two because q4 results and company forecasts are going to be critical, both because of the oil crash and because of uncertainty about holiday shopping results. Other than that, forecasts differ wildly but fear, greed and shock will always sell newsletters (and get the audience to rise at CNBC, and draw web traffic, etc). There’s little money to be made in saying “I don’t know”, but it’s a more honest approach… When in doubt, the person who thinks things will keep going more or less as they have been going will have the greatest chance of being right — but will miss the huge spikes and crashes that make names and reputations.
Seekng that patricia, sharon et all. what a bunch of hooey. It seems they all called the past corrections. All geniuses obviously. So who does one follow, Robert Wiedemer who says hyperinflation, the market will crash in 2013 or is that now 2014, or Martin Armstrong who states the opposite of this article, deflation, long live the market, maybe gold.
I say….Perhaps a balanced portfolio is best. I think Ill follow Charles Rutledge and stick to land I can grow food on. Probably doesn’t matter what the Government wants the Government takes, gold, food, oil…..it doesn’t much matter.
But are we not all tired of the doom n gloom, the fear or greed. It’s depressing, it saps peoples energy, hopes, dreams, confuses and there is nothing one can do anyway. I say lets stick to unwrapping the ‘present’ its so much more exciting and offers a great deal more to my day. With gratitude.
Lulu, I like the way you think!
Lulu:
Bravo… but I would add a dash of seasoning (a dose of Ben Graham) to your sauce!
Gigabill48@gmail.com
Great concept Lulu, just make sure you are ready if the Grinch cometh
Who does one follow – nobody – just yourself!
Who should one listen to though, when gathering data to make up your own mind about economic trends and bubbles? That’s more the question.
Like you, Jim Rickards believes in a balanced portfolio. He just thinks keeping 10% of it in gold will protect you against a currency collapse.
But ultimately, like you, he (and everyone I know) understands that the best security in bad times is owning productive (and/or potentially productive) real estate.
You are right about enjoying life – we try, and usually succeed. I can’t always though when I look at our young and consider future generations, because malignant governments and bankers the world over are so busy sapping people’s energy, hopes, and dreams.
Thanks Travis,
The information shared here on gold assets is very useful. Just wondering if sticking to stocks and gold is still a reliable way of protecting and growing capital, if TED spread chart warnings are followed.
I have read that the spread greater than 50 is a red signal and typically market crashes coincide with spikes above the red signal with a fore-warning at least 15 days ahead.
If the charts given here are accurate, the stocks could quickly be liquidated when the red signal is crossed which protects the capital at the same time maximizing the profits.
Whats your take on it ?
http://www.macrotrends.net/1447/ted-spread-historical-chart
I think the TED Spread is perhaps an indicator of credit risk — though we now know that LIBOR was essentially a made up number manipulated by banks for many years. If you look at a longer term relationship between LIBOR and the S&P 500 it seems to me that the spread was perhaps an early indicator of the credit crisis that took down markets starting in 2008… but otherwise the two aren’t particularly connected… the last time the TED spread went over 50, in late 2011, it presaged a three year bull market without any meaningful corrections. I suspect that following the TED Spread would be a good way of looking for a future credit crisis, but I doubt that the next crisis will be caused by credit risk and counterparty risk… my guess would be that the next crisis will be very different from the last one
Chart: Ted Spread vs. S&P 500, 10 years
Hi Travis,
Is it possible to get indications of any factors other than credit crisis of a market crash which gives at least a short notice to save capital and profits ?
Could you share your thoughts on those ? It is always better to be prepared than be sorry.
Seeking_That- Some say the Russell is THE leading indicator. The smallcapnetwork is probably the best free newsletter that I like to read daily. Thanks for your reporting at the Biotech conference and tables development. Best-Benjamin
Thanks a lot Ben .. I just registered myself to this newsletter ..
I am happy I could be of some help
Regards,
s_t
http://www.marketwired.com/press-release/russell-indizes-aktienm%C3%A4rkte-schwellenl%C3%A4ndern-erzielen-positive-rendite-trotz-eines-1983812.htm
http://www.russell.com/indexes/americas/indexes/index-series/russell-global-indexes.page has links to all Russell indexes.
The link to the Russell Emerging Markets Index is
http://www.russell.com/indexes/americas/indexes/fact-sheet.page?ic=R89950
Ben, I registered but it seems very aimed towards microcap pump and dumps. Just my two cents, for what it is worth (possibly zero!)
I bought my first gold bars at $350/oz. and my first silver at $5.00/oz. Over the years I have purchased a variety of precious metals in varying forms, including numismatic certified 1st Strike Black Diamond coins with found money ( tax refunds, special dividends, etc. ). Storage in undefined locations guarantees access in emergencies. In a true crisis paper anything can only be use to wipe your hemorrhoids. IMHO
PS I’ve NEVER sold anything
Man, you really called the bottom. Nice job. Those were some genius 2001 moves, unless you’re talking about what you did in the 70s, in which case, don’t feel too bad. We all did dumb stuff in the 70s.
In the future, Gold will always have value, while paper may only be good to start fires.
Travis,
Thanks for another thought provoking article. I had a fairly large position in Eldorado Gold (EGO) in 2014 but eventually sold my shares at a 11.5% loss. Good company which has recovered in share value but I really struggled with trying to understand the gold market and how it impacted EGO which certainly was not consistent. I found myself daily and frequently checking the highly volatile price of gold and no analyst seemed to be even close to getting anything right except to predict “if this than that”….chuckle well yes I can do that as well. Only the financial stocks seemed more perplexing to me. Even though few saw the collapse of oil coming at least one can understand it after the fact. I really admire those who profit from precious metal investing as I have never been any good at it. I looked into SGDM when you last wrote about it and will dig into it again but I am a little near term gun shy with precious metal investing. My view is one really has to pick a superior strong company and hold for a long time when it comes to investing in gold related industries. Tough to do when the price of gold is so unpredictable. Thanks again.
V/R
Tom
In my view the recent kerfluffle with euro/Swiss franc was inevitable and waited far longer than I expected. That may well spark a move to gold/silver as safe haven but it may just as likely bolster the $ as continued reserve currency. I feel there is a continuation of the cold war, in a sense, only now it is on a financial battlefield. I fear the number of allies the US can rely on is dwindling,,,due much to recent Whitehouse actions. Do not forget that we have some basic needs such as shelter water and food with the first two having inter-changeable priority according to weather/climate. Timberland with growing trees as well as crop land are always valuable for this reason although difficult to use to buy immediate essentials. Paradoxically people tend to seek alcohol more as things get worse so putting some cheap booze away might be a good investment. If you get 190 proof you good always use it as fuel in a pinch.
frank
In my painful long-term experience those who predict dire consequences for a long enough period tend to be right. People remember their right prediction ignoring the fact that they are wrong more than half the time,,,,IE ,less reliable than a coin toss. IMHO
frank
On the other hand,,,,,,,,,
why are we traveling so fast & it seems to be warmer ,,,,& just what are we doing in a Hand-basket??????
LACOLATST!
(Laughing and crying out loud at the same time)
We may be needing that 190 proof for ourselves and not be willing to trade it
I am a retired organic dairy farmer, here in the wilds of Northern Wisconsin. I moved to the country from Cleveland, Ohio in part to get more independence in case of economic collapse.
In the event of any form of economic distress, if you showed up on my doorstep trying to swap your gold or silver coins for meat or milk, I simply could not do it. In fact, I would probably laugh at you, even though my Daddy taught me not to be so rude. I would be pulling my hair out figuring out how to get repair parts, electricity and diesel fuel. If you show up with 5 gallons of diesel fuel you would get what you want.
I own a few collectible coins and zero bullion coins or ingots. In any real crisis they are useless or you will lose them to con artists. If you are going to own gold, do it through the market. My favorite is SAND ( Thanks Travis). Did you notice that in the last 30 days SAND is up 47%, much more than SGDM?
A better way is to establish a direct relationship with a farmer NOW! Start buying your meat, milk and other food products from a farmer now. Go to http://www.realmilk.com/ Read up on the farm direct, food and health movement. Then click http://www.realmilk.com/real-milk-finder/ , Example: Here are some close to Travis in MA: http://www.realmilk.com/real-milk-finder/massachusetts/#ma
Once you have make friends with your farmer, talk to him about putting in a larger diesel fuel tank and fill it ( especially when prices are low) . You pay for it with your gold bullion money and he pays you back with meat and milk every month. or you can by parts or a PTO Generator. You set up your own streaming deal with your farmer just like SAND does for their gold miners.
It is a great idea to do this, support local farming, improve your health and take your kids and grand kids out to the farm.
A new type of hedge fund. A great idea!
I like your dedication to farming Charles Rutledge and thinking outside the box. I have 3 acres which Im going to turn into rentable garden plots in beautiful Kaleden, in the Okanagan Valley of BC in the GWN. “Lemonberry Gardens, the home of healthy happy harvest”. My 5 year challenge! Booyahhhhh to you Charlie!
Lulu I think cropland and good relations with your neighbors are the absolute best assets to have in times of crisis. A community can barter with your differing talents and all survive without need of money. I remember the 1930s when no one had cash but we all got by thru doing that. Is your altitude at your home such that you have a decent growing season? If not there are several strategies to work around that. frank
Great post!
In preparation for any disaster (whether natural or man-made), we have some emergencies supplies. I consider the most valuable part of my emergency stores, other than water, to be a 7 acre supply of seeds. Seeds can be eaten, sprouted for greens and eaten, traded, or planted. So the small amount of junk silver coins we have actually comes in fourth – after water, seed packs, and freeze-dried foods.
What about some armament to protect your holdings. How high would that rank?
Our plan is to blind the home invaders by throwing seeds in their eyes, then knock them out with a little sack of junk silver.
Really enjoy your thoughts, Patricia. My plan is to use the proceeds from trading to try and put up a good dairy barn for my 10-15 milk goats. The few acres we do have need a lot of wild bushes for them to eat. Would like to fund a greenhouse for sprouts (for myself and the goats) and grow plants with aquaponic fish tanks. Have always wanted a nice sized blueberry farm, and hopefully that is workable. Already have a solar powered electric fence to keep the goats out of that! We need a separate website to address funding the farm with trading!
That sounds fantastic! We only use goat milk products in this household, because of the recommendations of a relative’s doctor: Dr. Steven R. Gundry (a highly respected cardiothoracic surgeon.) You should take a look at his website or read his book – he’s getting amazing results with his diet and continuing research.
May I chime in with my thumbs up after a good chuckle Patricia!!
Steve, if I cannot get organic cream, I use goats milk as the goat milk isn’t organic and I have not been able to find goats cream? Is there such a thing?
I make sprouts in a mason jar. ” Jar, alfalfa seeds or ??, screen, water daily, drain daily. Of course that cannot provide for 10 goats but perhaps another method would work just as easily but in a larger way.
cheers
For LULU Yes goats milk contains cream but it is the same color as the milk and more homogeniized so it does not rise or separate as easily. I would be careful with your sprouted alfalfa for at times salmonella will lurk in cracks in the seeds,,,,should test or buy tested seeds. Yes commercial sprouters are available generally for wheat grass or barley but goats do fine on brush with a little hay and if milking some ground grain or ordinary dairy feed. Goats are natural browsers and will nibble just about anything and may get poisoned by some common house plantings IE Yew ,Rhododendron,etc. Be aware that
the goats diet may flavor the milk they produce esp.aromatics like mint or sage.
Patricia Very practicable and luv your wit,,,Howard ‘some armament’ is a good way to get killed,,,Know your neighbors,,,there is strength in numbers,,,community has good record of common defense.. I think junk silver as investment is better than gold & has many uses as a metal/chemical. One of my friends turned in silver certificates,,,in the 1970s,,, and got a 1000 ounce silver brick which he painted black & burnt umber so it looked like rusty iron & used as a doorstop for years. frank
Smart friend! Hiding “in plain sight” can be a great method. Some of the other ways people hide PMs at home are impressive. One of the best I heard of was dropping gold coins into a full bucket of paint. Burglars are using metal detectors more and more, so any hiding place really should be made of metal itself.
Really?
What exactly can you do with a 60lb bar? Especially if it is worth ($5-10,000).
Small (one ounce or less) Junk silver I understand.
I completely agree with you, but to each his own. If someone wants to risk storing their own large quantities, then in bad times they’d have to be careful to already know or to find a trustworthy dealer when ready to unload.
rry about anecdote ,,,,,,I was not advocating what my friend did although a $1.00 an ounce turned in to a pretty good chunk for his retirement,,,,do not know what it was worth when cashed in $25/30,000 ???.
I did pretty good when I bought dimes and sold them in 2011, but as prep for crisis a few coins might get you something cookies would not. I still think booze is good idea.
Team,
EGO. As I mentioned earlier so hard to try and predict share value price (well certainly for me anyway) for gold related industries. I no longer own any shares of EGO but come on….down 21% on what appears as slightly higher costs within what appeared to be positive news yesterday. Gold price not tanking today. SAND and SGDM holding their own. Guess EGO investors were counting on much, much better news. Amazing.
V/R
Tom
I agree Thomas, that seems like an overreaction especially considering the general upswing in gold stocks. I think we can expect a (possibly choppy) long-term upward trend from here, and a CNBC interview yesterday with Marc Faber sums up the reason pretty well. Here are a couple of quotes from it:
“The only stock that I think has a great upside potential from here and in fact the GDXJ, the Junior Gold Mining Index is up 41 percent since the October lows and gold is up 14 percent since the October lows and this year 9 percent.”
“I think gold has a lot of upside potential, because I think people will wake up finally. I say finally that if they could short, sell short the central banks, that is the trade of the century. The central banks will be exposed of what fraud they commit,” Faber said.
http://www.benzinga.com/media/cnbc/15/01/5161920/marc-faber-part-bull-part-bear
And please note that it is difficult for reporters and bloggers to transcribe Mark Faber because he has a heavy accent and it often seems to be a poor phone or Skype connection when he appears on television. His command of English is much better than the above quotes might seem to indicate.
As always, the comment section is just as interesting and educational as what our beloved Travis publishes and is much appreciated by me. Thought I’d add my 2 cents as an amateur regarding a few issues. In 2012 I realized that despite my old 401K was back to the 2008 high’s that the recession was no where near over and after learning how corrupt/manipulated the stock markets are decided to invest in something that I at least knew at little bit about, Real Estate. At that time housing prices, even here in Paradise, AKA North San Diego coastal county, were at 10 year lows, well add that scenario to the one thing I did remember from business school is the “art of leveraging” so sold 90% of stocks off and proceeded to buy 3 houses over the next year and made a wonderful profit and now realize that Real Estate, at least here in San Diego, is way over priced just like in 2007 albeit for different reasons but suspect the same outcome within 6 months to 3 years………another international market crash based on major Credit issues, mega money printing and the currency wars which will be extreme in order for each country to “stay in business”. I do follow Jim Rickards and respect his philosophies and did buy into his “Gold Speculator” program at $1750/year. Not cheap and not something I’d normally do………….but I do agree there is another major crash coming and I refuse to lose half of everything AGAIN and based on history, esp. 2008, decided to stay in gold/silver for both protection but also to make a profit when all else fails as some of the smart gold owners did in 2008 and bought part of the following; Sprout gold miners, GDX, GLD, physical silver eagles (to be used as cash if crash is severe and I can’t get any cash out of my bank) and decided to “gamble a bit” with $15K in Jim Rickard’s Gold Speculator/Penny gold Jr miner stocks, a category I’d had NEVER considered before as too conservative but figured if he and many others are correct in predicting another crash, I might as well buy into a few “long shots” and hope for some nice gains. I have sold off all “normal stocks” at this point, just sold one rental house for nice profit after 3 years and going to sell 2 more rentals. Paying off my house=NO DEBT and am putting much of the proceeds into the same gold/silver asset classes mentioned above as I cannot think of any better place to park my money, esp. if we have hyper inflation I do not want to sit on “cash” when gold/silver will go up if market crashes. I know that cash could allow me to buy stocks at a low price, but if a gallon of gas or milk goes to $10/gallon, then…………………..??? Going to stay long in the above as I do see the coming economic storm coming once again and this time want to make money, not just break even. I do recommend taking seriously what Jim Rickards writes and speaks about and taking it into consideration before investing in anything……………..this next Depression will be nothing like anything we’ve seen based on so many different/new worldwide economic dynamics, esp. with the dollar losing ground as the primary Reserve currency. Anyone who thinks China will accept being denied into the “World’s Reserve Currency” for long may be in for a big surprise……………I do believe when things get worse they (China) will back their Yuan with gold. There is a good reason they have secretly been buying/hoarding gold for the past decade. They are not stupid and will do what is needed to survive. If they “have a better product” then my bet is the USA and other countries will have to compete in the currency market/wars by matching this move. This can only happen if gold is priced/valued at $10K+. I understand Jim Rickards logic and understand it is all gambling but based on all current events think it is a good gamble. At age 55, widowed, disabled, a 16 year old kid nearing college age, I CANNOT AFFORD ANOTHER 2008! Good luck to everyone in this new crazy illogical investing world…………………