Do Not Let The Next Downturn Leave You Penniless
Having a good, balanced portfolio means having an investing strategy that brings healthy returns while protecting your nest egg from risk. The best possible way to protect any portfolio is by diversifying. It seems like a mantra to many, but many have never explored how diversification can protect them based on possible, hypothetical situations. We explore that and prove out, once again, that the best way to avoid catastrophic losses is by putting your eggs in many baskets.
SPOILER ALERT – THIS IS JUST ANOTHER ADVERTISEMENT.
I said a few times – There should be a warning notice in the title stating this is an ad.
It should not be titled Pundits Perspective
lol james…………I always find the diversification approach an odd bird, those that have built massive wealth have been concentrated in 1 area, be it real estate or mining, oil, or technology….you know the guys with real wealth, Gates, Soros, Rogers etc…they bet it all in one sector sticking with what they knew.
I agree, stick with what you know best.
jj and c – exactly – totally agree with both of you
Diversification only applies to those who have an ample amount of money.
Yes, I also agree. I think we have a quorum!
Check out this chart from Zerohedge http://www.zerohedge.com/news/2014-04-23/feds-farcical-forecast-fiasco
You can count on the Federal Reserve to steer you in the right direction!
Gary Savage, John Williams, Doug Casey, and a host of others have been warning about a downturn in the economy and markets for quite a while. All of the numbers like home loans, new home starts, business earnings are heading down. Inflation is heading up. Keep buying PMs!
Well CJV gold will get its chance to prove its move as we enter the end of April on golds monthly chart the trend line in place since the Oct 2012 highs has NOT been broken to the upside….IF….gold can close April above $1297 it will be a first in 17 months.
I’m inclined to think PMs will remain low well into May. I’m thinking we won’t hold above 1300 until at least mid-May and maybe later. Goldman and JPM, etc predicted this takedown and they will extend it for a while. Besides…I’m going to a PM auction in mid-May and I need it to stay down so I can get some deals!
Yamana is at 8 year lows and a great bargain in my opinion. I picked up some today.
Sure I am diversified…real estate….gold…silver…real estate…gold…silver…rinse repeat….forgot oil…….oh yeah, Did Harry Dent say that is going down to $10.00 a barrel soon??? Better stay away from oil – the supply vs. demand fundamentals are horrible…:)…yeah, right.
Harry would have been right if the world remained balanced and conflict free. What he did not factor in were the increasing odds of war and also the machinations behind the scenes that demand oil rise to force inflation that is seen as a necessary part of the devaluative process.
The rise in oil did not cause inflation. Inflation caused the rise in oil (and gold, silver, and copper etc.).
I think you were not around as an adult during the energy crisis of the 1970’s. You are absolutely 100% wrong in your statement above. Sharply spiking costs of oil were the primary driver behind a round of bitter inflation that most Western countries were not prepared for. I recall those times vividly and I can assure you that your garden variety inflation was not what was pushing up energy prices nor acting as the juice that fed into the costs of virtually everything that had oil as a component in its price. Why don’t you research it a little more and then get back to me with a more knowledgeable comment.
‘Tis you who is mistaken 100%. Myths and propaganda will always be with us.
That is an empty statement. It has no content and offers no counterpoints to what I wrote. Since you are ignorant of history let me help you out a little. You can begin by reviewing why OPEC and the cartel of nations behind that organization made the decision to sharply hike oil prices to the West as a direct result of the Yom Kippur War and US support for Israel against its Arab neighbors. What you need to understand here is that was a political event driven by factors of conflict outside American borders and it was not a case where the dollar was devalued by forces within the country. Inflation comes in may forms. That one evolved out of a foreign war exactly as threats to energy supplies are likely going to be the driver for higher fuel prices if the Ukraine/Russia situation does not cool down. Nor can we rule out another war in the Middle East given the instability in Egypt, Syria, Yemen, Lebanon and the growing distrust of the US as expressed by Saudi Arabia. War may not be moving gold prices now but it has already had an effect on oil and gas projections. You need to review your history with more care if you want to engage me in a conversation on the subject.
THIS 1970 OIL CRISIS………..should be explored a little more………
since, I was around in and experienced the issue first hand…….
and remember, that we had gas lines …at every filling station, two different times
1971-2, 1974?……..those were real lines……long waits around the country.
The national speed limits…….on the INTERSTATES 55 mph……..that was real.
Then that gave rise to the invention of ETHONOL ….which was real., and TAX incentives for the same…
Then YOU had DOE…department of energy,,and the Elimination of Fmha,(which was a farmer organization for the manufacturing of ethanol on small scale farms)
The you did have interest rate of 10-16% for construction loans , from
1972-1978 that was real.
You could not get anything manufactured by oil, that did not raise on a monthly basis in in 1971-1978, that was real.
Going by memory …..since I was a youth fresh out of college, and did not have a clue.
Not taking sides , with either person here,,,,because , everything that seems to be one thing , ,,,turns out to be something else………….
Hi Jerry, my point is that the “powers that be” always, ALWAYS have a cover story to explain price movements that are due to their actions. In the following chart, we can see that the real reason oil shot up was because it first plunged in terms of gold (the same thing happened when the gold/silver ratio jumped to 96 in 2008 which led to the plunge to 32 in 2011). Like pulling a rubber band back and releasing it, markets store energy from one move which leads to a subsequent equal opposite move.
http://pricedingold.com/charts/Crude-1950.pdf
Again, looking at the chart, we can see that the plunge in oil versus gold was due to gold taking off, which, in turn, was due to Nixon’s closing of the gold window. The following spike in the ratio was due to oil catching-up while gold corrected. Five to six fold gains in a short period will always bring in asset rotation (selling the leader to buy the laggard).
By the beginning of 1980, the oil/gold ratio was right where it was before Nixon did the dirty deed. In other words, while gold climbed nearly 25 fold, oil did roughly the same. Hence, the rise in both was due to a loss of confidence/value in the U.S. dollar.
If Birdman and the 90% who probably agree with him were correct in their view, then oil should have outperformed gold without the help of the preceding plunge in oil’s gold price.
No matter how one attempts to spin it, U.S. DOLLAR turmoil was first, and was the cause.
Like today, the majority were present only in body, not mind.
Btw, note that the gold oil price has gone nowhere in 45 years while the dollar oil price has gone up about 100 fold!
Matthew………..Thanks for the reply…….and thanks for the additional info…appreciate ………..There is always A REASON………J
(1) Global wage are falling.
(2) Population growth for developed countries is falling.
(3) Retired populations are becoming larger than the working population.
Deflation, deflation, deflation.
Not everywhere Har. On my side of the world wages and rents are rising. Work is plentiful for locals although at extremely low relative wage rates while inflation is quite hot in excess of 15% in real terms (despite government figures stating it is several points lower). Construction is utterly booming everywhere, there are no old people to speak of and no retirement funds even if there were and factories and plants are relocating here at a rapid pace from around the world. This is a renaissance for an African continent that has up until now been left out of the global growth story of the past. You see it in the numbers of new resorts and hotels that are in the works. Addis Ababa alone has something like 15,000 new hotel rooms coming onstream in the next few years and those are represented by not just local endeavors but by most of the worlds best known Hotel brands. Luxury rooms have not been a hallmark of this city in the past but that is all changing quickly. The developed economies may face stagnation and even deflation but I strongly suspect that the growth story will remain intact here for many years to come as this development story it is still in its early formative stages and it has something on its side the rest of the world sorely lacks. Momentum and a very young energetic workforce.
Good Luck to you Paul….resistance on the upside is @ $8.25 and then @ $8.50 a close above that zone would be a breakout and a safer place to add more shares.
Should add its very tricky to call a stock when its involved in a takeover-Osisko
A GOOD BUY PAUL ! TAKE YOUR TIME ! COOL IS THE WAY !
Most if not all of the mid sized gold/silver companies reported loss recently. Just like John Kaiser said, 75% of the small to mid size companies are going to die. In the next few years, we will have trouble getting physical silver or maybe gold if this trend continues. I don’t think market allows permanant losses. These companies have trouble raising money in a major way. I am only adding more physical PM and physical ETF now. I have Yamana but it dropped steeply even it resisted the gold’s decline for long time. If gold does not go up, even Gold Corp will lose money. Who is left? Either gold goes up or producers go bust. I am betting on both. Uncle Sam will never allow gold to rise to the real value so the miners will be on survival mode for years.
Excellent opinion, Lawrence.
Lawrence,
China, Russia, Germany, etc…will have their say soon enough…..
I feel they are not trying to defeat US control. They just try to get physical cheaply. If China wants and US resists, China can buy all gold with cash and leave US naked. But they seems not willing to do it. I guess they are trying to get a little by little at low price until US is no longer willing or be able to sell.
Lawrence,
Agreed. True..even the physical bars they are re casting are from the 1960’s if I understood that correctly. Shipped off to Asia – never to be seen again in our lifetime.
Agreed, they seem to be working with the suppression. But when they can’t get any more physical? Why would they continue then? I’d bet on a reset.
Lawrence, did Kaiser really include any mid tiers in that opinion? I thought he was talking about TSX-V companies only; which makes a lot of sense to me.
I was just wondering the same. I don’t recall him suggesting any mid levels going bust either. Mostly he was referring to that group of 600 or so Juniors that were pretty much flat broke or heading towards insolvency given enough time.
Yes he most means juniors. But if I understand him correctly, a lot of mid size companies also full into the same money loosing model. Off course my hero is Rick Rule, who I rely on heavilly.
Thanks. I’m sure there are some bad mid tiers.
Outside of South Africa?
Actually, Matthew
He did use the words -some mid-tier companies – paraphrased…I kind of was shocked when he said that – I was also going to mentioned it to you today……:).
Thanks Marc.
I watch inverse ETFs and a Canadian gold one just dropped 5%
Once upon a time I had 4 to 6 different stocks and they all went to zero so I diversified into gold and silver bullion and coin and have been doing fine ever since except for the market manipulation being done to trash the price of my holdings.
Hang in there Steven – time is on our side and HISTORY TOO!!
I don’t believe that anyone should invest anything until their home mortgage is paid off assuming you want one. If not go ahead and diversify like Al says and that could include more real estate. I was recently reading about two American brothers who became extremely wealthy in the 1920’s, they had 100,000 employees and paper assets worth more than 125 million US. In the 1930’s they were leveraged to the eyeballs and had not paid for their own home. They lost everything. DT
In the future a few years out when the SHTF in meaningful fashion and gold, silver and other metals are extremely valuable in nominal prices and in short supply, all of these mining operations are going to be nationalized on a world wide basis.
Even if not full blown outright nationalization the taxing authority demands in percentages of profits will render these companies as dead carcasses and simply no longer viable as on-going business models.
Going forward this is one of the of the easiest calls to quantify if you have read any history whatsoever.
Governments are the greediest and dumbest, incompetent thieving cabals on the face of the earth. They will steal and confiscate everything of value before its all said and done. There will be nothing left unscathed.
PM investors had better be honing their collective skills and staying nimble in selling these miners instead of trying to figure out when to buy them a few years from now. The little guy has three may be five years to wade through this mining sector before big brother reaches in for the feasting.
Of course the nationalizations will occur and cascade thorough the weakest and smallest country’s first, but the large bankrupt nations in the west will follow suit in due course.
There will be profits to be had in the immediate future of the mining sector, but the writing is on the wall. Your key points of reference for serious profit taking should be in the $3,000 – $4,500 Gold range. Silver is applicable as well. That’s the ranges I feel that will start to invoke mass draconian behavior by insane gov agencies.
Of course all in the name of national security. The little nationalistic sheep always love to be lied to and the “national security” comic relief meme will be used to perfection.
I conceur with your statement albeit unwillingly. Government may (will) try to tax gold owners to death if confiscation proves to unpractical. We should buy small denomination gold and silver coins. If you have a lot of money, you should store gold in several nations as well.
Howdy Lawrence,
The main jist of my snippet was cenetered on miners (stocks). The nationalizing of those companies will play out at some future date, making the stocks themselves effectively worthless.
Now the physical metal which you are talking about is different in its dynamics. A global portfolio of coins and bars secured outside of the banking cabal and spread across numerous countries is a very wise action indeed.
that is unless everything goes down together!