Gold, Silver, Copper

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
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selftalk
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Gold, Silver, Copper

Post by selftalk »

Don`t look now but the gold, silver and copper train is leaving the station. It`s a shame that most Bogleheads aren`t diversified into at least a small percentage of these asset classes. The sentiment has been very negative and isn`t that the way it`s supposed to be at low price levels?
MassInvestor
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Re: GOLD, SILVER, COPPER

Post by MassInvestor »

Time to rip the plumbing out of the wall
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Re: GOLD, SILVER, COPPER

Post by Professor Emeritus »

selftalk wrote:Don`t look now but the gold, silver and copper train is leaving the station. It`s a shame that most Bogleheads aren`t diversified into at least a small percentage of these asset classes. The sentiment has been very negative and isn`t that the way it`s supposed to be at low price levels?
I hang gold silver and copper on DW and she looks great. Metals are something industry uses. I buy the industry , not the raw material. Everything else is hot air and hype.
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nisiprius
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Re: GOLD, SILVER, COPPER

Post by nisiprius »

selftalk wrote:...Don`t look now but the gold, silver and copper train is leaving the station....
Do you mean they are going up or that they are going down? I looked at some charts and I honestly can't tell. I get it, though, that whatever I'm supposed to do, I need to do it right now.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
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Re: GOLD, SILVER, COPPER

Post by mwm158 »

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Re: GOLD, SILVER, COPPER

Post by surfstar »

Perhaps the train is steam / coal powered? We could invest in those also...
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Re: GOLD, SILVER, COPPER

Post by Phineas J. Whoopee »

Wouldn't you prefer to eat a nice gruff billy goat? :happy
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nisiprius
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Re: GOLD, SILVER, COPPER

Post by nisiprius »

surfstar wrote:Perhaps the train is steam / coal powered? We could invest in those also...
How about one that's fueled by burning bitcoin? It's propelled by vapor.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
sscritic
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Re: Gold, Silver, Copper

Post by sscritic »

The average price of copper more than quadrupled [almost quintupled] between 2003 and 2013, costing more than $4.27 per pound by 2011
I think you are 10 years late.
2003 $67/100 lb
2013 $326/100 lb
http://www.energy.gov/sites/prod/files/ ... 040914.pdf

Actually, prices are falling since the price was $427 in 2011. Pick your time period and get any result you want.
Topic Author
selftalk
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Re: Gold, Silver, Copper

Post by selftalk »

I expected these kind of replies which is an indicator of negative sentiment in general. The general asset classes are very over extended but the precious metals are cheap yet most do not see this. Time will tell of course.
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Re: Gold, Silver, Copper

Post by sscritic »

Copper is not a precious metal. When you call copper a precious metal, what is that an indictor of?
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Re: GOLD, SILVER, COPPER

Post by nisiprius »

MassInvestor wrote:Time to rip the plumbing out of the wall
Especially the gold and silver plumbing.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
Crow Hunter
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Re: Gold, Silver, Copper

Post by Crow Hunter »

I sort out my old copper pennies and I am asking for a 1/2 oz gold eagle and a 1 oz silver eagle for my birthday from my wife this year because I have wanted one since first getting into D&D in grade school and there are no guns that I want this year.

Does that count?

:D
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Re: Gold, Silver, Copper

Post by sscritic »

It might be possible to have a serious discussion, but a discussion that starts with trains leaving the station isn't serious.

My father has studied the energy field for years. In part because of the need for renewal* of the electric power grid in the US, he had invested in various copper mining stocks over the past 10 years. He has done well (but in comparison to what?) and likes his winners more than his losers. Last month, I went with him to his broker's, and he instructed her to sell. Now I own broad based mutual funds (and unlike others around here, I have no interest in giving my father books in order to convince him that he is a fool), but I respect his knowledge of his field.

I have no idea what you know, but I do know you like trains.

* the state of the power grid in the US is well known and is not something that was just discovered last week.
Longtimelurker
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Re: Gold, Silver, Copper

Post by Longtimelurker »

by "leaving the station" you mean 30% off of their peak? I agree with that.
Stay the course. If you can't resist greed, and fear is proven to be 2x as strong, you are doomed as an investor.
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Re: Gold, Silver, Copper

Post by Longtimelurker »

selftalk wrote:I expected these kind of replies which is an indicator of negative sentiment in general. The general asset classes are very over extended but the precious metals are cheap yet most do not see this. Time will tell of course.
By cheap do you mean 1) highly deviated from their several hundered year historical mean to the tune of about 50% too high, or 2) cheap compared to the mania of the last decade and the recent peak?
Stay the course. If you can't resist greed, and fear is proven to be 2x as strong, you are doomed as an investor.
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Re: Gold, Silver, Copper

Post by Jack FFR1846 »

I save pre-1982 pennies. Fun to do, costs nothing and when they are taken out of circulation.....whooo hoooo
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Re: Gold, Silver, Copper

Post by Sbashore »

selftalk wrote:I expected these kind of replies which is an indicator of negative sentiment in general. The general asset classes are very over extended but the precious metals are cheap yet most do not see this. Time will tell of course.
Is your technical analysis of the charts telling you this? Or your crystal ball?
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Re: GOLD, SILVER, COPPER

Post by Gattamelata »

nisiprius wrote:
surfstar wrote:Perhaps the train is steam / coal powered? We could invest in those also...
How about one that's fueled by burning bitcoin? It's propelled by vapor.
I was hoping that the precious metals would be taking off in a balloon, so that I could convince y'all to invest in my vast reserves of hot air ;-)
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Re: Gold, Silver, Copper

Post by nisiprius »

Throughout all times, all places, throughout all of history and long before it, every single culture in the world has always put a value on lead. The Bible mentions it in Exodus 15:10. The Romans prized it for the exquisite flavor and sweetness it adds to wine, and the flights of creativity it evoked in the emperors who drank it.

In southwest Wisconsin, canny Native Americans knew how pieces of nearly pure native metal could be had, literally for the taking, right off the ground. Soon, thousands of miners came to the area, flocking from all corners of the globe, as far as Cornwall, lured by the intriguing mystique of the magical gray metal and, Lo! the Badger State was born.

It inspired the sonorous harmonies of heavy metal bands like Led Zeppelin. It is the protective shield par excellence among nuclear radiation experts throughout the planet. It is the very symbol of military potency. Its surpassing heaviness in the hand, its incomparable softness, make it sensuous to the touch.

And breathes there the man who has not been aroused to reverie by the divine Galena crystal's display of cubic perfect cleavage?

Image

Smart insiders have known for years that a hefty slug of lead can help diversify a portfolio. This chart shows what we mean by "diversification."

Image
Chart source

But let's plummet right to the bottom line here. If you think that lead could possibly offer potential riches and limitless wealth--I mean "diversification"--then shouldn't you call us to learn how lead can show its mettle and sync your portfolio?

Nisiprius Investments. "Others Lead, We LEAD."

(It's a joke. There is no such firm as Nisiprius Investments and nothing is being offered for sale).
Last edited by nisiprius on Fri Jul 11, 2014 12:42 pm, edited 1 time in total.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
Professor Emeritus
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Re: Gold, Silver, Copper

Post by Professor Emeritus »

nisiprius wrote:Throughout all times, all places, throughout all of history and long before it, as far back as the lower Cretaceous age, every civilization, every culture in the world has put a value on lead. The Romans prized it for the exquisite flavor and sweetness it adds to wine, and the flights of creativity it evoked in the emperors who drank it.
Nisiprius Investments. "Others Lead, We LEAD."

(It's a joke. There is no such firm as Nisiprius Investments and nothing is being offered for sale).
You omitted its crucial role in the military industrial complex. Lead counterweights Allowed the sarissa to extend to 21 feet Roman Slingers used cast lead pellets. Lead counterweights made the trebuchet a city breaker. lead bullets dominated the battlefield. Lead acid batteries were crucial to diesel submarines. Lead paint has been used for a century to ward off barnacles. Even the dead were brought home in lead caskets.

More modern uses are of course classified , but anyone dealing with the military knows that the number of Leadbottoms is increasing by the year.
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Re: Gold, Silver, Copper

Post by Crow Hunter »

nisiprius wrote:Throughout all times, all places, throughout all of history and long before it, every single culture in the world has always put a value on lead. The Bible mentions it in Exodus 15:10. The Romans prized it for the exquisite flavor and sweetness it adds to wine, and the flights of creativity it evoked in the emperors who drank it.

In southwest Wisconsin, canny Native Americans knew how pieces of nearly pure native metal could be had, literally for the taking, right off the ground. Soon, thousands of miners came to the area, flocking from all corners of the globe, as far from Cornwall, lured by the intriguing mystique of the magical gray metal and, Lo! the Badger State was born.

It inspired the sonorous harmonies of heavy metal bands like Led Zeppelin. It is the protective shield par excellence among nuclear radiation experts throughout the planet. It is the very symbol of military potency. Its surpassing heaviness in the hand, its incomparable softness, make it sensuous to the touch.

And breathes there the man who has not been aroused to reverie by the divine Galena crystal's display of cubic perfect cleavage?

Image

Smart insiders have known for years that a hefty slug of lead can help diversify a portfolio. This chart shows what we mean by "diversification."

Image
Chart source

But let's plummet right to the bottom line here. If you think that lead could possibly offer potential riches and limitless wealth--I mean "diversification"--then shouldn't you call us to learn how lead can show its mettle and sync your portfolio?

Nisiprius Investments. "Others Lead, We LEAD."

(It's a joke. There is no such firm as Nisiprius Investments and nothing is being offered for sale).
I have been investing in that precious metal for years in the form of 124gr NATO 9mm and 55gr XM193 and 36 & 40 gr .22LR slugs. :twisted:
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Re: Gold, Silver, Copper

Post by Sbashore »

Crow Hunter wrote:
nisiprius wrote:Throughout all times, all places, throughout all of history and long before it, every single culture in the world has always put a value on lead. The Bible mentions it in Exodus 15:10. The Romans prized it for the exquisite flavor and sweetness it adds to wine, and the flights of creativity it evoked in the emperors who drank it.

In southwest Wisconsin, canny Native Americans knew how pieces of nearly pure native metal could be had, literally for the taking, right off the ground. Soon, thousands of miners came to the area, flocking from all corners of the globe, as far from Cornwall, lured by the intriguing mystique of the magical gray metal and, Lo! the Badger State was born.

It inspired the sonorous harmonies of heavy metal bands like Led Zeppelin. It is the protective shield par excellence among nuclear radiation experts throughout the planet. It is the very symbol of military potency. Its surpassing heaviness in the hand, its incomparable softness, make it sensuous to the touch.

And breathes there the man who has not been aroused to reverie by the divine Galena crystal's display of cubic perfect cleavage?

Image

Smart insiders have known for years that a hefty slug of lead can help diversify a portfolio. This chart shows what we mean by "diversification."

Image
Chart source

But let's plummet right to the bottom line here. If you think that lead could possibly offer potential riches and limitless wealth--I mean "diversification"--then shouldn't you call us to learn how lead can show its mettle and sync your portfolio?

Nisiprius Investments. "Others Lead, We LEAD."

(It's a joke. There is no such firm as Nisiprius Investments and nothing is being offered for sale).
I have been investing in that precious metal for years in the form of 124gr NATO 9mm and 55gr XM193 and 36 & 40 gr .22LR slugs. :twisted:
Me too, plus an indirect play on copper from the jackets. :happy
Steve | Semper Fi
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Kenkat
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Re: Gold, Silver, Copper

Post by Kenkat »

Jack FFR1846 wrote:I save pre-1982 pennies. Fun to do, costs nothing and when they are taken out of circulation.....whooo hoooo
I thought I would be the only one who does this - and now I am the third on this thread alone.

Plus the silver coins in my collection - anything I am lucky to find in the wild that is silver gets saved along with outright purchases.

Can't afford to put together a set of gold coins. The commodity price gets in the way of collecting when it comes to gold.

p.s. The 1982's are usually copper as well; the switch over to zinc (or Zincolns as I like to call them) happened pretty late in the year. You can tell by weighing them - copper = 3.12g or so; zinc = 2.54g or so. I have gotten to the point that I can usually tell just by look and feel.
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Re: Gold, Silver, Copper

Post by HenryPorter »

--------------------------------
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Re: GOLD, SILVER, COPPER

Post by abuss368 »

MassInvestor wrote:Time to rip the plumbing out of the wall
Priceless.
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Re: Gold, Silver, Copper

Post by abuss368 »

To me, this is speculation. If perhaps the investor would like to allocate a percentage of the portfolio to precious metals, and will sleep better at night, then go for it.

I follow the advice of Jack Bogle, Rick Ferri, David Swensen, and Warren Buffett and that is there are no earnings and no dividends. I would rather own businesses and bonds.

Best.
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Re: GOLD, SILVER, COPPER

Post by jdb »

MassInvestor wrote:Time to rip the plumbing out of the wall
There was a banker in Miami years ago who did install gold fixtures in his office bathroom. But he went to jail and I never heard what happened to the fixtures. But on a more serious note I think I read some years ago that allocation of about 5 percent to precious metals (I don't think that included the copper or lead trains) yielded marginally better returns to a portfolio due to non correlation.
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Re: Gold, Silver, Copper

Post by LongerPrimer »

I did, once. Lost maybe 50% over a couple of years. DIscovered on TV that the miners have expenses, big expenses. They also do a lot of futures hedging. I no longer wanted to something that depended more on someone else's hedge rather than their ability to extract and produce a product.
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Re: Gold, Silver, Copper

Post by 22twain »

nisiprius wrote:Image
Chart source
Wow, that chart gives a whole new meaning to the term "lead balloon." :shock:
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Re: Gold, Silver, Copper

Post by jebmke »

nisiprius wrote:
MassInvestor wrote:Time to rip the plumbing out of the wall
Especially the gold and silver plumbing.
I suppose I could rip my teeth out.
Don't trust me, look it up. https://www.irs.gov/forms-instructions-and-publications
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Re: Gold, Silver, Copper

Post by DonCamillo »

I want to own some commodities for diversification. So I bought a bunch of mining companies. You can find them in the Vanguard Total Stock Market Index Fund (VTSAX) and the Vanguard Total International Stock Index Fund (VTIAX).

I am reasonably certain that I have beneficial ownership of at least of few grams each of Gold, Silver, Copper, Lead, Uranium and a bunch of other commodities. I even have some oil!
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Epsilon Delta
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Re: Gold, Silver, Copper

Post by Epsilon Delta »

Far be it for me to question Nisiprius Investments' sales pitch, but the rest of the world's charts aren't quite as dramatic. Is mongabay quoting in Zimbabwe Shekels?

In Sept 2007 lead peaked at $2220/tonne which is pretty close to todays spot price of $2175/tonne


http://www.indexmundi.com/commodities/? ... months=360
http://www.infomine.com/investment/meta ... /lead/all/


And could some of you please trim your quotes in future. The galena crystal was cool the first time.
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Re: Gold, Silver, Copper

Post by bhsince87 »

I've studied this subject, seriously, for quite some time. IMO, it would be foolish to ignore it or write it off completely.

Also IMO, it is foolish to consider metals or other commodities as "investments". Buying them is speculation or gambling in the worst case, insurance or hedging at best.

Back in the day when many currencies were backed by gold and silver, then yes, owning them made a lot of sense as a currency hedge. And I think a lot of the advice and recommendations for owning them are carry overs from that era.

At one point, I had about 10% of my net worth in gold and silver. Now it's less than 1% (not because I sold any).

I recommend that anyone who can afford it should buy some gold coins. 1 Oz are best, but smaller ones are fine too. Not numismatic coins, but the cheapest bullion coins you can find. Then when you feel depressed, get them out and play with them. They are magical, at least to me. And after looking at them and feeling them for a few minutes, I'm reminded why they have value. And any temptation I have to buy more goes away.

That being said, gold is very useful for moving large amounts of money outside of the banking system. The only vehicles that are more dense are gems and art, but they are much less liquid. So IMO, there will always be a demand from that market.
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Re: Gold, Silver, Copper

Post by Epsilon Delta »

bhsince87 wrote: That being said, gold is very useful for moving large amounts of money outside of the banking system. The only vehicles that are more dense are gems and art, but they are much less liquid. So IMO, there will always be a demand from that market.
At $44/g, gold's a piker compared to €500 notes which are about $800/g. If you us a compression band the euros are better per volume as well. Even $100 bills have a higher specific value than gold.
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Re: Gold, Silver, Copper

Post by bhsince87 »

Epsilon Delta wrote:
bhsince87 wrote: That being said, gold is very useful for moving large amounts of money outside of the banking system. The only vehicles that are more dense are gems and art, but they are much less liquid. So IMO, there will always be a demand from that market.
At $44/g, gold's a piker compared to €500 notes which are about $800/g. If you us a compression band the euros are better per volume as well. Even $100 bills have a higher specific value than gold.
Yes, that's a valid point. There are some situations where good ole cash money works just as well.
Time is what we want most, but what we use worst. William Penn
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Re: Gold, Silver, Copper

Post by Professor Emeritus »

bhsince87 wrote:
That being said, gold is very useful for moving large amounts of money outside of the banking system. The only vehicles that are more dense are gems and art, but they are much less liquid. So IMO, there will always be a demand from that market.
of course while you are moving it a bullet in the head becomes an occupational hazard. Since gold can be remelted (unlike cash gems or art) it is even more attractive to any thief with a gun.
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Re: Gold, Silver, Copper

Post by Johno »

abuss368 wrote:To me, this is speculation. If perhaps the investor would like to allocate a percentage of the portfolio to precious metals, and will sleep better at night, then go for it.

I follow the advice of Jack Bogle,... and Warren Buffett and that is there are no earnings and no dividends. I would rather own businesses and bonds.
I omitted two of the gentlemen because I've never heard of them. I highly admire Jack Bogle as a friend of the individual investor. Warren Buffett not quite as much, perhaps for off topic reasons, though I realize he's also a much smarter person than I am. Anyway, especially Jack Bogle does or should realize according to his own philosophy of investing that if one takes a position like 'US corporations are where you want to invest' it might be in part because you're who you are with the experiences you've had, in your time. Those are two extraordinary men who lived in the American golden age. I hope such an age continues or returns (depending your POV of whether it still continues now). Even if not it might be replaced by a situation no worse practically speaking at least for relatively well off Americans. However neither Bogle nor Buffett nor anyone else knows that a benign future lies ahead.

I concur with the view that everyone who can afford a reasonable amount should have some gold, bullion coins from lowest cost reputable vendor you can find. Silver is a hybrid precious/industrial metal that's marginal in terms of the weight and space required to store a worthwhile amount of value with coins actually in your possession (ie in a bank safe deposit box, as opposed to a paper investment) and copper investing is obviously a different animal, in no obvious way a hedge against very difficult times (probably the opposite). In the kind of situation where gold might really come in handy expectations of standard of living might be very much lower, so the % might be quite low in a healthy sized portfolio. It needn't be a major drag on returns assuming good times. To make clear, I reject the idea of being able to *predict* a hyperinflation etc and moving a large % of a significant portfolio into gold. It's a small insurance policy for an unlikely time when a small fraction of your current financial asset portfolio sadly becomes a significant fraction, but when expectations will also have diminished.
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Re: Gold, Silver, Copper

Post by abuss368 »

Johno wrote:
abuss368 wrote:To me, this is speculation. If perhaps the investor would like to allocate a percentage of the portfolio to precious metals, and will sleep better at night, then go for it.

I follow the advice of Jack Bogle,... and Warren Buffett and that is there are no earnings and no dividends. I would rather own businesses and bonds.
I omitted two of the gentlemen because I've never heard of them. I highly admire Jack Bogle as a friend of the individual investor. Warren Buffett not quite as much, perhaps for off topic reasons, though I realize he's also a much smarter person than I am. Anyway, especially Jack Bogle does or should realize according to his own philosophy of investing that if one takes a position like 'US corporations are where you want to invest' it might be in part because you're who you are with the experiences you've had, in your time. Those are two extraordinary men who lived in the American golden age. I hope such an age continues or returns (depending your POV of whether it still continues now). Even if not it might be replaced by a situation no worse practically speaking at least for relatively well off Americans. However neither Bogle nor Buffett nor anyone else knows that a benign future lies ahead.

I concur with the view that everyone who can afford a reasonable amount should have some gold, bullion coins from lowest cost reputable vendor you can find. Silver is a hybrid precious/industrial metal that's marginal in terms of the weight and space required to store a worthwhile amount of value with coins actually in your possession (ie in a bank safe deposit box, as opposed to a paper investment) and copper investing is obviously a different animal, in no obvious way a hedge against very difficult times (probably the opposite). In the kind of situation where gold might really come in handy expectations of standard of living might be very much lower, so the % might be quite low in a healthy sized portfolio. It needn't be a major drag on returns assuming good times. To make clear, I reject the idea of being able to *predict* a hyperinflation etc and moving a large % of a significant portfolio into gold. It's a small insurance policy for an unlikely time when a small fraction of your current financial asset portfolio sadly becomes a significant fraction, but when expectations will also have diminished.
Hi Johno,

David Swensen is the CIO of the Yale University Endowment. He has written an excellent book entitled "Unconventional Success" that many Bogleheads have read and recommend. Dr. Swensen and Jack Bogle have written forwards on some of their books.

Rick Ferri is an excellent investment advisor who posts here all the time. He educates many of us Bogleheads with his insight and articles. Please see his website http://www.rickferri.com for additional information.
John C. Bogle: “Simplicity is the master key to financial success."
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Re: Gold, Silver, Copper

Post by John3754 »

selftalk wrote:Don`t look now but the gold, silver and copper train is leaving the station.
Looks like your train has stalled.
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Re: Gold, Silver, Copper

Post by Clearly_Irrational »

selftalk wrote:Don`t look now but the gold, silver and copper train is leaving the station. It`s a shame that most Bogleheads aren`t diversified into at least a small percentage of these asset classes. The sentiment has been very negative and isn`t that the way it`s supposed to be at low price levels?
I happen to like gold, but it has special characteristics and isn't necessarily appropriate for all portfolios.

Silver is pretty much the crazy train, you won't get me anywhere near it.

Copper is a commodity, if you're going to own commodities buy a basket don't speculate on individual metals.
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cfs
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Joined: Fri Feb 23, 2007 12:22 am
Location: ~ Mi Propio Camino ~

Re: Gold, Silver, Copper

Post by cfs »

Collection.

Fwiw I do have a good collection of silver and gold coins. This is not part of my boring SWAN portfolio, it is not for sale, and I continue to collect silver coins. Note that collection is the keyword.

Thanks for reading.
~ Member of the Active Retired Force since 2014 ~
Tamales
Posts: 1644
Joined: Sat Jul 05, 2014 10:47 am

Re: Gold, Silver, Copper

Post by Tamales »

Clearly_Irrational wrote:
Silver is pretty much the crazy train, you won't get me anywhere near it.
Wow! you aren't kidding (I never really compared them before):
Image
texasdiver
Posts: 3937
Joined: Thu Jun 25, 2009 12:50 am
Location: Vancouver WA

Re: Gold, Silver, Copper

Post by texasdiver »

Some fun facts about gold.

Current estimates are that approximately 171,000 tones of gold have been mined by humans in all of history. If all of that gold was melted down into a single bar it would form a cube about 20 meters on a side (67 ft) which is about the size of an average McMansion.

By contrast the worlds oceans contain an estimated 20 million tons of gold dissolved into the sea water. Or about 40 lbs of gold per cubic mile of sea water. To date no one has discovered a method of successfully extracting gold from sea water although many have tried.

Most notably the German Oceanographic survey ship the METEOR in the 1920s. After World War I the Germans were faced with huge reparations in the form of gold, about 50,000 tons of it, and no natural gold resources within Germany. So they sent some of their best chemists to sea on the METEOR on a secret mission to attempt to extract gold from sea water. Had they been able to do so, world history could have been much different.
Valuethinker
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Re: Gold, Silver, Copper

Post by Valuethinker »

sscritic wrote:It might be possible to have a serious discussion, but a discussion that starts with trains leaving the station isn't serious.

My father has studied the energy field for years. In part because of the need for renewal* of the electric power grid in the US, he had invested in various copper mining stocks over the past 10 years. He has done well (but in comparison to what?) and likes his winners more than his losers. Last month, I went with him to his broker's, and he instructed her to sell. Now I own broad based mutual funds (and unlike others around here, I have no interest in giving my father books in order to convince him that he is a fool), but I respect his knowledge of his field.

I have no idea what you know, but I do know you like trains.

* the state of the power grid in the US is well known and is not something that was just discovered last week.
your father sounds like a very interesting man. He and my father would have had some good chats. My father was in the power business.

I just read 'Junkyard Planet' by Adam Minton, in which I learned:

- a decent fraction of the world's copper 'consumption' is in fact recycled. People in 3rd world countries pull all that plastic off telephone wires (power cables a no brainer) and recycle the copper. There is 'loss' of copper, but it's not anything as big as I imagined it would be. Given the low container prices *back* to China, it's economically efficient to ship scrap from Europe and USA back to China, and from Middle East back to India.

- half the world's copper was going into buildings and infrastructure in China. The Chinese have probably overbuilt in the short term so that's not bullish. In the long run, the movement of China to say an 80% urbanized country (in line with other developed countries) from a 50/ 50 rural/ urban split, is not yet over. There is lots to do yet, even if we discount High Speed trains that fall off the tracks

How big the US power grid demand in this context I don't know-- but I don't think it is as big as China. But yes the renewal problem is huge. The grid was built up in the 60s/ 70s and it is now reaching the end of its designed life (also loads are greater). However the copper in it can be reused.

Renewable energy means big demands for grid infrastructure. Wind farms and solar farms tend to be in remote areas and they have to be hooked up to the grid, a major constraint. In the UK you add offshore wind. The future of power transmission is in long distance and international High Voltage DC lines. For example the UK to Norway, and to Iceland, north Germany to south Germany, solar resources in North Africa to Europe, etc.

The main issue is the world mining industry is now intensely concentrated. I suspect the big 3-5 producers are more than 50% of production and could be more like 70-80%. Environmental and political changes (third world countries demanding more concessions in return for taking their minerals) mean it's expensive to build a new mine-- the big producers are cutting back capex in response to shareholder demands. First World it's almost impossible to get permission for a new mega mine.
Valuethinker
Posts: 49035
Joined: Fri May 11, 2007 11:07 am

Re: Gold, Silver, Copper

Post by Valuethinker »

texasdiver wrote:Some fun facts about gold.

Current estimates are that approximately 171,000 tones of gold have been mined by humans in all of history. If all of that gold was melted down into a single bar it would form a cube about 20 meters on a side (67 ft) which is about the size of an average McMansion.

By contrast the worlds oceans contain an estimated 20 million tons of gold dissolved into the sea water. Or about 40 lbs of gold per cubic mile of sea water. To date no one has discovered a method of successfully extracting gold from sea water although many have tried.

Most notably the German Oceanographic survey ship the METEOR in the 1920s. After World War I the Germans were faced with huge reparations in the form of gold, about 50,000 tons of it, and no natural gold resources within Germany. So they sent some of their best chemists to sea on the METEOR on a secret mission to attempt to extract gold from sea water. Had they been able to do so, world history could have been much different.
It would have devalued gold. So maybe not as great an impact as it would seem at first sight (they have more gold, but it is worth less). Mind you, a general inflation post 1929 might well have stopped the rise of Hitler-- it was the German austerity at that point that gave Hitler his electoral chance.

Technology saved Imperial Germany before that.

At the end of 1914 Germany no longer had access to natural nitrates deposits (bird guano) from Latin America due to the Royal Navy. Agriculture and ammunition production would have collapsed. So Haber invented the process extracting nitrogen from air. Imperial Germany was able to keep fighting for another 4 years in the bloodiest human conflict then experienced (likely exceptions: Taiping Rebellion in mid 19th c China, Mongol invasions of China, Middle East and Europe).

Haber also invented the first poison gases in a bid to end the war quickly. One is reminded that inventors of the machine gun thought it would make war less bloody (fewer men on the battlefield) and the inventor of dynamite thought it would make war too destructive to take place.

Probably the iron law of war is that we underestimate the resourcefulness and adaptability of our opponents.

When hit with phosgene gas, the French Zouaves broke and ran in total surprise. The Canadians (days later)? The gas was heavier than air and flowed into the trenches. So the Canadians stood up out of the trenches and beat the German attack back-- they held the line.

I am reminded that no national defence exercise pre 911 had a script which ended with 'informed by cellphone of the situation in New York and Washington, the passengers organize themselves, arm themselves with a food trolley and attack the cockpit, forcing the hijackers to crash the plane in a field in Pennsylvania and thus preventing death and destruction over Washington'. The final line of defense of the United States of America during the most devastating non-wartime attack in its history became its own civilians. (Danny Friedman (an Israeli national) of Akimai was on the first plane to hit WTC, and there were garbled reports that passengers tried to resist, so maybe this wasn't a lightning strikes only once event).
Last edited by Valuethinker on Wed Jul 23, 2014 6:17 am, edited 2 times in total.
Valuethinker
Posts: 49035
Joined: Fri May 11, 2007 11:07 am

Re: Gold, Silver, Copper

Post by Valuethinker »

I am normally a big sceptic on gold

BUT

recent actions by the US to freeze bank accounts (eg connected to Iran) have meant more countries are using gold as a means of settlement (you can't freeze gold).

That means there is a demand shift in favour of gold.

I just don't know how big this could get, but there have been a couple of pieces on it.
Clive
Posts: 1950
Joined: Sat Jun 13, 2009 5:49 am

Re: Gold, Silver, Copper

Post by Clive »

There's lack of faith in any one single primary reserve currency. The tendency is more towards a one-world fiat paper standard (a new currency unit) issued by a World Reserve Bank - "the bancor", "unita", "phoenix", rather than a return to the finite reserves gold standard. Where the WRB could issue as much bancors as it wished and supply them to its country of choice in order to maintain world economic stability/growth. If/when that comes to fruition you might find a lot of the current held gold reserves being dumped into the market. The UK (Gordon Brown) did that in the 1990's - selling a chunk of the UK's gold reserves in order to buy the relatively 'new' Euro's - his choice of timing subsequently being challenged with hindsight. That process was stopped from others following in concern as to the impact upon the global price of gold.
Valuethinker
Posts: 49035
Joined: Fri May 11, 2007 11:07 am

Re: Gold, Silver, Copper

Post by Valuethinker »

Clive wrote:There's lack of faith in any one single primary reserve currency. The tendency is more towards a one-world fiat paper standard (a new currency unit) issued by a World Reserve Bank - "the bancor", "unita", "phoenix", rather than a return to the finite reserves gold standard. Where the WRB could issue as much bancors as it wished and supply them to its country of choice in order to maintain world economic stability/growth. If/when that comes to fruition you might find a lot of the current held gold reserves being dumped into the market. The UK (Gordon Brown) did that in the 1990's - selling a chunk of the UK's gold reserves in order to buy the relatively 'new' Euro's - his choice of timing subsequently being challenged with hindsight. That process was stopped from others following in concern as to the impact upon the global price of gold.
But the problem of bancor and politics remains. The US can freeze your bancor accounts.

Maybe it's bitcoin. But at the moment, there is this shift (I don't know how big) towards settling in gold.

Pre the 20th century gold was the unit of settlement *but* from the 1600s Dutch and English banks issued 'bills' which could be spent anywhere and redeemed by the recipient in London. That was the basis of international finance of trade.
Clive
Posts: 1950
Joined: Sat Jun 13, 2009 5:49 am

Re: Gold, Silver, Copper

Post by Clive »

Valuethinker wrote:But at the moment, there is this shift (I don't know how big) towards settling in gold.
gold Renminbisation

BRIC (Brazil, Russia, India, China) is 35% of world trade (global GDP), 42% of the global population, yet have a relatively (disproportionately) small international (financial) voice (11% of which 4% is China). (Europe 21% of global GDP, US 23%).

RMB (out of emerging Mumbai and Shanghai financial centres), Euro, US$ settlements, one level down from a future global currency unit. China holds massive amounts of RMB/US$/EU swaps.

Whilst some are converging, others are potentially breaking away, so fluid. For instance the UK makes up 15% of total Euro GDP (UK 3% of global GDP) and in 2017 there may be a OUT of EU referendum in the UK - perhaps to converge/combine more with the 21% 'others' (Canada 2.5%, Australia 2% ...etc). The Euro experiment reveals that a bunch of dissimilar individual countries struggle when fiscal responsibilities are centralised, the UK being sovereign was free to QE, apply its own measures of austerity etc and is more recently one of the strongest/fastest growth areas in Europe as a result, whilst Greece etc are still struggling (couldn't implement QE or their own choice of austerity, but had that imposed by central europe).
Last edited by Clive on Wed Jul 23, 2014 7:43 am, edited 2 times in total.
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