The Germans aren't happy

Stitch · Sep 6, 2011

German Chancellor Angela Merkel expresses the same views as many in Germany feel toward the bailouts of broke countries. I can't see the Euro holding out for much longer, unless it's just the currency for France, Germany, Belgium, Finland, The Netherlands and Luxembourg.

http://www.nytimes.com/2011/09/07/world/europe/07iht-germany07.html?_r=1&ref=world

poindexter · Sep 6, 2011

Jeez, the other countries sound like such crybabies.

The Big Ragu · Sep 6, 2011

I have been posting this for about a year on various threads. The Germans and French were only going to have so much will to carry the currency. And now that Germany's economy is in the crapper, they don't even have the ability.

And on top of everything, Switzerland pegged its franc today to the Euro, setting a minimum rate of 1.20. I didn't bother to revive my gold thread. But the price is hovering around $1900 and this is about the most bullish thing that can happen to gold. Gold is now an alternative currency. With every currency from the dollar to the Euro to the Swiss Franc now to even the Chinese Renminbi, because of their runaway inflation, looking like shit, hard assets are the place to be -- as I have said forever on here.

http://business.financialpost.com/2011/09/06/swiss-franc-peg-may-unleash-gold-rally/

EStreetJoe · Sep 6, 2011

and I thought this was going to be about them getting blamed for bombing Pearl Harbor

Armchair_QB · Sep 6, 2011

When the Germans aren't happy Poland gets invaded.

bumpy mcgee · Sep 6, 2011

EStreetJoe said:

and I thought this was going to be about them getting blamed for bombing Pearl Harbor

Click to expand...

I thought they finally got the Hasselhoff roast on TV

Brooklyn Bridge · Sep 6, 2011

The Big Ragu said:

I have been posting this for about a year on various threads. The Germans and French were only going to have so much will to carry the currency. And now that Germany's economy is in the crapper, they don't even have the ability.

And on top of everything, Switzerland pegged its franc today to the Euro, setting a minimum rate of 1.20. I didn't bother to revive my gold thread. But the price is hovering around $1900 and this is about the most bullish thing that can happen to gold. Gold is now an alternative currency. With every currency from the dollar to the Euro to the Swiss Franc now to even the Chinese Renminbi, because of their runaway inflation, looking like shit, hard assets are the place to be -- as I have said forever on here.

http://business.financialpost.com/2011/09/06/swiss-franc-peg-may-unleash-gold-rally/
Click to expand...

Say one of us has a couple of bucks to spend. Would it be wiser to start a Roth IRA, or to get that money into gold? How does that work? I don't get to take home little gold bullions. What about when it is time to cash in?

(We both have fully-funded IRAs and will be looking for other investment vehicles)

TwoGloves · Sep 6, 2011

EStreetJoe said:

and I thought this was going to be about them getting blamed for bombing Pearl Harbor

Click to expand...

It wasn't over then "and it ain't over now."

The Big Ragu · Sep 6, 2011

Brooklyn Bridge said:

The Big Ragu said:

I have been posting this for about a year on various threads. The Germans and French were only going to have so much will to carry the currency. And now that Germany's economy is in the crapper, they don't even have the ability.

And on top of everything, Switzerland pegged its franc today to the Euro, setting a minimum rate of 1.20. I didn't bother to revive my gold thread. But the price is hovering around $1900 and this is about the most bullish thing that can happen to gold. Gold is now an alternative currency. With every currency from the dollar to the Euro to the Swiss Franc now to even the Chinese Renminbi, because of their runaway inflation, looking like shit, hard assets are the place to be -- as I have said forever on here.

http://business.financialpost.com/2011/09/06/swiss-franc-peg-may-unleash-gold-rally/
Click to expand...

Say one of us has a couple of bucks to spend. Would it be wiser to start a Roth IRA, or to get that money into gold? How does that work? I don't get to take home little gold bullions. What about when it is time to cash in?

(We both have fully-funded IRAs and will be looking for other investment vehicles)
Click to expand...

I am not a financial advisor. So don't buy ANYTHING because an anonymous guy on the Internet typed something. ...

You are not going to buy gold bullion with $100. Just to trade a single commodities future, which allows you to control 100 troy ounces, the minimum margin requirement is around $7,500 and if you have no experience, you are going to have trouble finding a broker.

But. ... the Roth IRA and some exposure to gold or precious metals (or really anything) are not mutually exclusive. There are exchange-traded funds (known as ETFs) that mirror the price of gold. Some are leveraged (as in try to give you twice the returns; but you risk twice the losses). The biggest one (and a lot of hedge funds and institutional buyers even just invest in it this way; it has A LOT in assets under management) trades under the ticker GLD. Google it. I am not sure where the price is for a share. So you can start your Roth IRA and then within it, using an ETF or ETN invest in gold -- and LOTS of other things. There is a whole wide-world of commodity-based ETFs and ETNs.

Just whatever you do, when you buy any asset, have a comfort level because YOU understand it and have either fundamental or technical reasons why you believe you should own it. That is ESPECIALLY true if you are investing (as opposed to trading) and you plan to buy and hold for some time, because you think it will appreciate in value. Understand it and feel comfortable with it for your own reasons, not because someone told you to.

deskslave · Sep 6, 2011

Ohhh, the Germans are mad at me. I'm so scared! Ooh, the Germans!

BYH · Sep 6, 2011

This is nothing a David Hasselhoff tour can't fix.

The Big Ragu · Sep 6, 2011

One thing also about the GLD ETF I posted about above. ... THere are issues with these ETFs that remind me a lot about the issues that led to the mortgage-backed securities crisis we had in 2008. This is part of a way-too-long post of mine from 2008. Just be aware of this if you buy a gold ETF (or in the case of this story short the Euro through an ETF). ETFs have to own the actual asset, but they are very unregulated in terms of custodians and subcustodians. Which in short means that if you own a gold ETF, you don't actually own a claim to any gold:

There is a wild story there that I actually haven't seen written. ... and why your friend would say, "buy real gold and store it someplace safe." People believe the ETFs actually hold the physical gold to cover their positions, and if you read through one of the prospectuses, without knowing the shenanigans they can get away with, you might believe that too. But there is real risk there, and if you are really prone to mistrust, you won't touch what those guys are seling. They have a custodian holding gold reserves to cover the shares they issue, so technically it sounds like they have enough gold to pay out what is owned if people redeem.

But what people don't realize is that the custodian can lease out the gold. It is even more complicated than that, though. The custodian can actually lease it to another entity, so you are now two steps removed from the manager of the ETF and the gold that is supposedly backing this giant fund people are putting their money in, has now been leased twice and is being held by someone the ETF manager doesn't even know. Take it another step. Legally they can give it to ANOTHER subcustodian (and another and another, etc), so now you have the gold in the hands of someone even unknown to the original custodian. Meanwhile, the manager of your ETF, who is guaranteeing your investment, has no legal obligation to audit the gold, and even if you think your ETF is as good as gold, the actual gold backing up the price of that ETF has not been allocated to any particular investor. So all you own is a promise, not any actual gold. And the gold behind that promise has not been subject to what I would think are strict enough controls. It's an exchange-traded gold fund, so lots of investors not understanding how this works probably think they own "gold" and it is regulated by the CFTC (which regulates commodities). But the ETF is not subject to CFTC regulation.

If there was ever a meltdown, investors would be smacked with a reality that there was actually very little actual gold backing their investment in the gold ETF. That network of custodians and subcustodians I mentioned would fall apart like a giant ponzi scheme. And the ETFs would collapse. As a holder of shares, sure, you'd have a claim to a chunk of gold. But there would be someone out there like Goldman Sachs (as people on here believe, it's always Goldman Sachs, right?) who has a claim on the same gold you have a claim on. And unfortunately for the ETF investor, Goldman would have the actual gold in its possession. Which means the poor people who invested in the ETF (a paper transaction) would be shit out of luck -- or at best settle for pennies on the dollar.

The whole thing is a bit far-fetched, but keep in mind that so was the collapse of the mortgage derivatives market that was structured similarly in an odd way -- all this counter-party risk, that put competing claims on single assets. And if you own an ETF, as a small investor, you will not be the winner in any of those claims. Which is why you have people out there saying, "stay away from that stuff. Buy REAL gold." I'd sort of tend to agree, even though I don't expect anything as severe as what I just typed. But for a small investor, if you want to trade in and out of gold and try to make short-term money on the ups and downs, the ETFs are a cheap and easy way to do it, without having to learn how to become a commodities trader. I'm not sure I would buy and hold shares in GLD, though.

I know there are people out there actually thinking about the doomsday scenario I just laid out and always holding contracts for physical delivery of gold -- just in case. In that scenario, they'd be sitting on a fortune. What they are doing is buying huge futures contracts and expecting the physical delivery of gold. They in effect are the subcustodians, several times removed, from the management of those ETFs. If there was the meltdown I described, they'd actually own the gold everyone was trying to lay claim to (it's the old mantra -- possession is 9/10 of the law and you'd actually have the gold in your hands). And when the price shot up, they'd be sitting on a gold mine (pun intended). As I said, it's a bit far-fetched, but the google the Hunt Brothers -- they actually tried to corner the silver market in 1980 in a similar way, and the price of silver shot up briefly to $50 or $60 an ounce because of their manipulation.
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The Germans aren't happy

Stitch Active Member

poindexter Well-Known Member

The Big Ragu Moderator Staff Member

EStreetJoe Well-Known Member

Armchair_QB Well-Known Member

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Brooklyn Bridge Well-Known Member

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The Big Ragu Moderator Staff Member

deskslave Active Member

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The Germans aren't happy

Stitch Active Member

poindexter Well-Known Member

The Big Ragu Moderator Staff Member

EStreetJoe Well-Known Member

Armchair_QB Well-Known Member

bumpy mcgee Well-Known Member

Brooklyn Bridge Well-Known Member

TwoGloves Well-Known Member

The Big Ragu Moderator Staff Member

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BYH Active Member

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