OT - Money / Investing Thread (aka financial no stupid questions)

[Wildcat4E]

Found this little blurb in the SS website:

Your benefit amount is based on your 35 highest years of earnings adjusted for inflation. To calculate your benefit estimates we assume you'll continue to work and make around the same amount as last year until you claim benefits.

Every year your employer tells us how much money you earned so we can update your earnings record. You can adjust your annual income to see how a change in income would affect your future benefits.

[Wildcat4E]

If that happens then the certainty will be that neither you nor I gets a cent from the program.

We need a dislike button.  I hit like so it's noted I saw it, though.

[MikeDeTiger]

Today's question:  

Anybody put any retirement contributions into gold, or converted a portion of your 401k/IRA into gold?  If so, how do you rate the decision?  

Or, even if you've never done it, you can just give your thoughts on it.  

I've never messed with that, but I can see that since 1971 when we went completely off the gold standard, gold has massively outpaced the dollar against inflation.  It also seems reasonable to hedge against rapid inflation (or the doomsday scenario where the rest of the world finally realizes we print too many dollars while owing too many of them).  

OTOH, gold could be a completely different animal than stocks--I wouldn't know--and past performance may not be the same indicator of future performance as with stock indexes.  Also, gold has been on quite a tear the last few years, and this might be a bad time to buy.  There's been a little dip since February, but there's been no major pullback since, basically, 2000 or so.  So maybe there's not really a "good" time to buy....just buy at the insane prices and hope it continues.  

As I consider this, I'm not really thinking in terms of short-term investment and selling when the price rises.  I'm thinking in terms of holding as part of a retirement portfolio and I'd be selling incrementally in those years.  

[utee94]

Actual footage of MDT:

[MikeDeTiger]

Just to tack on to that:

In 1971 if you bought gold at ~$35, that's worth ~$4,080 today.  

Alternatively, if you invested that $35 in a fund that returned an average of 7%, it's worth ~$1,626 today.  Gold wins.  But if it returned an average of 10% in the market, it's worth ~$8,371.  Gold loses.  

The key is, that's factoring in 55 years worth of compounding interest, which doesn't apply to me.  I don't/won't have 55 years in the market.  The key would seem to be what happens in the next 20-40 years, i.e., my potential retirement window.  In the last 20 years, gold has kicked the ever-living $h!t out of the dollar.  

[MikeDeTiger]

Actual footage of MDT:

I've actually noted many times that I think this is exactly the image a lot of angry-about-billionaires types have in their minds.  

[Cincydawg]

I have a one ounce gold coin and a fair amount of silver, mostly "rounds".  Silver has done well since I bought most of it some 6-7 years back as a kind of hedge.  It would be a very small portion of my retirement portfolio, but I do have some silver/natural resources stocks like NANR.

[Cincydawg]

Story about increasing "yield" by writing covered call options...

I had amassed 500 shares of ABBV, a drug stock, pays a decent dividend (2.8%), has done well over the years.  I decided a few weeks back to sell some it.  Often instead of selling I will write an out of the money call option, which I did on 400 shares, August 14 260s.  If they ran up and sold for $260, OK.  I got about $2500 for the premium.

So, within two weeks the stock ran up to 265 which puts me "out of the money", well OK fine.  Then for some reason the stock turned around, went as low as about $242.  OK, right?  Not exactly, had I sold at $255 I'd have been better off than writing the option.  It's $245 right now.

Anyway, the "lesson" may be that writing near our of the money options to sell a stock won't work out if the stock price drops a fair bit, versus selling.

I thought about closing out my position, which is the same thing as buying the call option.  I didn't.  Yet.

[847badgerfan]

I have some cash sitting in my self-directed Roth that I could throw at some gold.

Is now a good time?

[Cincydawg]

I stopped buying silver after it went past $40 except a bag of 40% silver coins I got a month ago.  I can't tell when it's a good time to buy much of anything unless I'm in Costco.  I have bought from MoneyMetals, they ship what they say.

Some outfits have "fine print" like how some coin is really clad, not pure.

[847badgerfan]

I'm thinking of gold bars. Some of my friends have them.

Maybe I should ask them.

[Cincydawg]

A thing about bars, if you ever want to sell them, you might need an assay, and you also of course need safe storage.  Of course if you buy coins you're paying a premium vs bulk anyway.

Gold Bars - Buy Gold Bullion Bars Online - Various Sizes and Weights - Money Metals

I see gold bars going for around $4400, gold coins around $4500.  I'd probably go with coins myself.  Gold is trading at $4269 at the moment,  that's a bulk price.

I figured silver coins might be more "tradeable" if the economy ever completely tanked.

[Cincydawg]

This is an ETF I hold, not that much, but some, as a "hedge" a bit:

State Street SPDR S&P North American Natural Resources ETF (NANR) Holdings - Yahoo Finance
State Street SPDR S&P North American Natural Resources ETF (NANR) Holdings - Yahoo Finance

[MikeDeTiger]

I have a few "rolls" of silver coins I bought probably 15-16 years ago.  I bought at a high, the price of silver dropped afterward and as far as I know, only just recently went up high enough to have been profitable.  I never cared much though....I only bought them as a sort of TEOTWAWKI kind of thing.  I never intended to trade them for profit.  Only regret there is if I'd waited just a while longer I could've gotten more for the same price.  

I'm not sure about this, but I think those outfits that help you convert retirement accounts to precious metals don't actually give you physical gold.  Which makes sense well enough if it's a genuine investment.  But if the goal is to survive the Zombie Apocalypse, then not so much.  I guess then you'd want to have physical gold in hand.  Or in the safe.  Next to the gun.