Australia is a leveraged time bomb waiting to blow

Looking at physical gold.
It becomes attractive in times of fear and uncertainty because, unlike money, it's not an IOU.
....
But then again, who knows, there could be another flare up of hostilities in the Middle east involving Iran and Israel. That might put a rocket under the gold price.

Isn't hoping for something bad to happen to create uncertainty thereby helping Gold price is more like speculating rather than investing? When it comes to your life savings and retirement isn't it better to put it in something with high probability of expected future returns than into something with no certainty of future returns?

Cheers,
Oracle.
 
Isn't hoping for something bad to happen to create uncertainty thereby helping Gold price is more like speculating rather than investing? When it comes to your life savings and retirement isn't it better to put it in something with high probability of expected future returns than into something with no certainty of future returns?
Isn't buying a stock index fund and hoping there is a repeat of historical performance also speculation?
 
Isn't buying a stock index fund and hoping there is a repeat of historical performance also speculation?

I don't think so...stocks certificates are claims to real businesses which employ real people who trade their labour/time for money and provide real services to the community.

Businesses need to remain profitable and growing atleast in real terms or else no business would bother taking on the risk and efforts to operate one. Governments and central banks know this that without profitable business you have got no stable economy which creates jobs, wealth and inturn tax revenue.

So I am happy to bet that in future good businesses or to be safe cross section of all businesses (aka Index) will continue to grow and be worth a lot more. If long term inflation rates are repeated into future then long term stock returns can also be expected to be repeated.

Cheers,
Oracle.
 
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I don't think so... So I am happy to bet.
So you don't think it's speculation, but happy to bet?

It's an idiom I know, but IMO your post only solidifies that you are speculating on stocks (to some degree).
Everything is speculation, like investing in gold.
Don't disagree (although I think there is a case to be made that a very small percentage of a portfolio in Gold as insurance is not speculation). Was just pointing out the irony.
 
So you don't think it's speculation, but happy to bet?

It's an idiom I know, but IMO your post only solidifies that you are speculating on stocks (to some degree).

Sure...in pure technical terms it is speculating. Any investing activity has risk, so you have to deal with probabilities.

The important thing that separates pure speculating vs intelligent investing is the probability is much much higher in investing of getting your capital and satisfactory return on your capital back because those probabilities have been calculated on strong reasoning and not hope.

Cheers,
Oracle.
 
no there is speculating and then there is investing.

There is risk with both.

But there are different rule books to intelligently minimise those risks.

Those that don't know the difference between the two really expose themselves to unnecessary risk.
 
no there is speculating and then there is investing.

There is risk with both.

But there are different rule books to intelligently minimise those risks.

Those that don't know the difference between the two really expose themselves to unnecessary risk.

investing or speculation doesnt matter when prices crash they both will be victims, its all in the timings as with stock market who comes out the winner.

Lets see some graphs to prove Australians debt levels, investing/speculating peoples wise to income levels of the investors/speculators with that ratio we will know exactly if we are leverage a time bomb.
if and most average investors are on 60% LVR have 2-3 properties i dont think we are on a time bomb until its more like 90% LVR 5-6 properties per investor/speculator :)
 
Hobo-jo,so which way do you think the price of Gold will go,,i'm still trying to understand the mechanics of the way it works but any in business I know mainly building are starting to prepare for a slow down until the date for the next election is called maybe a small window..

Which way will gold go? Here are two possibilities.

I'm sure hobo-jo is hoping for the right hand side, but I'm thinking the left...

 
Mike Maloney from Goldsilver.com has done tonnes of research regarding the various economic cycles etc. His research goes back to the ancient greeks, who clipped their gold coins without the public knowing. He, and many others, say eventually all fiat currencies go back to zero - and this has happened through out history back to the greeks and romans!

If you Youtube 'Webster Tarpley - wall streeet casino for the elite', or words to that effect, you'll see him talk about the wall street derivatives market. Apparently the elite ( Banksters?) have put bets on all types of crazy things i.e whether it'll rain or shine tomorrow!!

Tarpley states that the derivatives market is the one to watch as it is worth more than several quadrillion! and if it collapses somehow the whole world will come to a halt!!!

Richard Duncan also says to watch the same market. A few others too.
 
One reason not to invest in gold is that the USD is stable and as such there is no longer a need (insurance) to hold gold.

Another reason is that ultimately gold is just another 'resource' and with resources on the decline gold will decline just the same.

Further if you buy into the Harry S Dent scenario with the peak in Baby Boomer spending then we are on the verge of a deflationary period and this will have the same deflationary effect on gold along with all other assets.

Cheers

Someone mentioned the other day Gold is also an inflation hedge and inflation levels are low:confused:
 
Someone mentioned the other day Gold is also an inflation hedge and inflation levels are low:confused:
I don't think Gold is an effective inflation hedge (CPI) over the short term, but history shows it tends to cycle in value back to very similar levels over the long term (will buy same quality/quantity of goods).
Why pre 1975?
Because that's when oracle said the first index fund became available (so post this date there was no need for direct exposure to individual companies).
 
I don't think Gold is an effective inflation hedge (CPI) over the short term, but history shows it tends to cycle in value back to very similar levels over the long term (will buy same quality/quantity of goods).

As per a post on SS by MIW I'd heard an old timer mention a weeks wages as a marker

Because that's when oracle said the first index fund became available (so post this date there was no need for direct exposure to individual companies).

Ah okay, probably Bogle, though there's also the S&P plus the Dow Jones which go back to somewhere pre 1900
 
As per a post on SS by MIW I'd heard an old timer mention a weeks wages as a marker
Yep, has maintained a consistent ratio (cycling up and down within a range) in Australia over 100+ years: http://www.bullionbaron.com/2012/06/aud-gold-price-exceeds-weekly-aussie.html

Ah okay, probably Bogle, though there's also the S&P plus the Dow Jones which go back to somewhere pre 1900
The indices may go that far back, but doesn't mean you had easy price exposure without swapping in and out of stocks to match it (which was my point).
 
The indices may go that far back, but doesn't mean you had easy price exposure without swapping in and out of stocks to match it (which was my point).

You do nowadays though ;)

The market has an expected return over time greater than inflation

Dow originally had 12 stocks in it and now has 30

According to wiki

The components of the DJIA have changed 48 times in its 117-year history.
 
I don't expect companies within the DOW index changed that often. But I could be wrong. Else how could the index funds match the returns of the index so closely with only a 0.05-0.07% difference?

True..but since inception 1982 the returns on PP is 6.76% while S&P is 11.12%

$10,000 invested in 1982 in PP would be worth $71,163.44 and the same amount invested in S&P500 would be worth $236,465.06

Cheers,
Oracle.

Hi Oracle

I was on another site and thought about the above post

Plugged in the S&P500 from Jan 1 1982 to Dec 31 2012, pressed a button and got

"Average" return of: 12.64 %
"Annualized" return of: 11.19 %
Standard Deviation of: 16.92 %

$10,000.00 turned into $267,700.00

A nice return

In 1982 $10,000.00 would've been a fair bit of cash at the time, I think in that year (or the next) I was earning $90 per week

Just as a further exercise, adjusting the above for inflation the $267,700 turned into $109,600

The above does factor in dividends, but not additional contributions along the timeline
 
Hi Oracle

I was on another site and thought about the above post

Plugged in the S&P500 from Jan 1 1982 to Dec 31 2012, pressed a button and got

"Average" return of: 12.64 %
"Annualized" return of: 11.19 %
Standard Deviation of: 16.92 %

$10,000.00 turned into $267,700.00

A nice return

In 1982 $10,000.00 would've been a fair bit of cash at the time, I think in that year (or the next) I was earning $90 per week

Just as a further exercise, adjusting the above for inflation the $267,700 turned into $109,600

The above does factor in dividends, but not additional contributions along the timeline

Yes, indeed.

For long term passive investing..a very good place to put your money IMO.

Cheers,
Oracle.
 
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