Crash Proof Peter Schiff

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movingaround_IHB

New member
Anyone here taken the advice of this book and moved into foreign stocks and gold? The book is quite convincing - however, it is such a big step to move out of all our standard mutual fund portfolios - makes me a bit queasy!
 
I am long only Canadian commodity based stocks and precious metals. I came to certain conclusions through other avenues, not by reading Mr.Schiff's book, but I have read his articles from time to time. My portfolio and position feels secure to me and does not cause me queasiness. But, I can see how any drastic change could make one feel extremely uncomfortable.
 
movingaround - I bought and am reading his book and am almost finished with it. A great read IMO. I love watching his videos -- he always brings an interesting perspective to TV financial discussions. <a href="http://www.europac.net/video.asp">www.europac.net/video.asp</a>





I have been all foreign for the last few years and have done very well. I wouldn't feel that nervous because I heard 50% of the market is outside the US now. However, to a certain extent if the US market goes down, it does seem to have an impact overseas. Then again, emerging/developing countries provide a better return, although they can be more volatile than some are comfortable with.





For those who haven't read Schiffs book, the high-level summary is: Buy outside of the US because our economy will collapse due to huge deficit and debt, no savings, no manufacturing being performed local, dollar is and will continue to get weaker, and also because you get better returns/dividends overseas.
 
what happened to the old "diversify, diversify, diversify"? If you invest exclusively in foreign markets, your risk goes way up..

and precious metals? I don't believe in that, you never know when and where they discover more precious metals ore and start mining. if that happens, the price of precious metals would go way down.
 
<p>Awgee, listen to blackacre-seeker! You've been wrong all this time. </p>

<p><a href="http://images.search.yahoo.com/search/images/view?back=http%3A%2F%2Fimages.search.yahoo.com%2Fsearch%2Fimages%3Fp%3Dgold%2Bpanning%2Bprospector%26y%3DSearch%26ei%3DUTF-8%26fr%3Dyfp-t-501%26x%3Dwrt%26js%3D1%26ni%3D18&w=140&h=229&imgurl=steelwhitetable.org%2Fmedia%2Fimages%2Fpanning-for-gold.jpg&rurl=http%3A%2F%2Fsteelwhitetable.org%2Fblog%2F2006%2F07%2Fpage%2F2&size=11.1kB&name=panning-for-gold.jpg&p=gold+panning+prospector&type=jpeg&no=5&tt=236&oid=5ba46d7e92dddd6c&ei=UTF-8"><img title="http://steelwhitetable.org/blog/2006/07/page/2" height="130" alt="Go to fullsize image" width="79" src="http://sp1.mm-a1.yimg.com/image/2130403376" /></a></p>

<p>If this guy strikes it rich, the "price of precious metals would go way down." And then where will you be, with all that worthless gold you've got stashed away?</p>

<p><a href="http://images.search.yahoo.com/search/images/view?back=http%3A%2F%2Fimages.search.yahoo.com%2Fsearch%2Fimages%3Fp%3Dgold%2Bpanning%2Bprospector%26y%3DSearch%26ei%3DUTF-8%26fr%3Dyfp-t-501%26x%3Dwrt%26js%3D1%26ni%3D18&w=140&h=229&imgurl=steelwhitetable.org%2Fmedia%2Fimages%2Fpanning-for-gold.jpg&rurl=http%3A%2F%2Fsteelwhitetable.org%2Fblog%2F2006%2F07%2Fpage%2F2&size=11.1kB&name=panning-for-gold.jpg&p=gold+panning+prospector&type=jpeg&no=5&tt=236&oid=5ba46d7e92dddd6c&ei=UTF-8"></a></p>

<p><img style="DISPLAY: block; MARGIN-BOTTOM: -402px; POSITION: relative; TOP: -402px" height="400" alt="" width="300" src="http://l.yimg.com/www.flickr.com/images/spaceball.gif" /><img style="DISPLAY: block; MARGIN-BOTTOM: -402px; POSITION: relative; TOP: -402px" height="400" alt="" width="300" src="http://l.yimg.com/www.flickr.com/images/spaceball.gif" /></p>
 
<p>Plz, all the easy metals have been found. If they go up in price more will be found, but not enough to cause a price collapse.</p>

<p>Haven't read Shiff's book, but at least part of that summary can't be right. If we exported our manufacturing jobs, and we did, then if the American consumer buys less, and we will, the manufacturing jobs lost will be in China, not here. Ports will be hurt tho. How are California ports doing lately?</p>

<p>One of the things I used to advise people who wanted to invest in real estate (back when it looked like that might be a good idea) was to tell people not to go somewhere else to do it. They might not know the local market very well, but at least somewhat.</p>

<p>They would not know the mkt, on say, the West Coast of Florida at all. I don't and can't know the factors which affect the Chinese, so would never invest in China. And so, for the rest of the world, unless you are one of those people who have their feet in 2 cultures.</p>
 
<p>you gotta love this :)</p>

<p>"Today, gold bugs tend to be economically pessimistic, believing that a certain company, sector, or the entire <a title="Stock market" href="http://en.wikipedia.org/wiki/Stock_market">stock market</a> is going to <a title="Stock market crash" href="http://en.wikipedia.org/wiki/Stock_market_crash">crash</a> and thus gold will be the only reliable <a title="Store of value" href="http://en.wikipedia.org/wiki/Store_of_value">store of value</a> during a depression. Gold bugs have a lot of published work and Web articles. They are sometimes among the first people to mention a pending problem, such as a <a title="Real estate" href="http://en.wikipedia.org/wiki/Real_estate">real estate</a> bubble. While they may be right sometimes, critics contend that overall gold bugs preach doom and gloom in an attempt to persuade others to buy gold, driving up the price so they can sell the gold they have for a profit. Proponents may argue that in today's system of <a title="Fractional reserve banking" href="http://en.wikipedia.org/wiki/Fractional_reserve_banking">fractional reserve banking</a> and centrally managed money supply, gold is among the few investment instruments that maintain their value. This same motivation has been alleged by those who <a title="Short selling" href="http://en.wikipedia.org/wiki/Short_selling">short sell</a> a stock."</p>

<p>(emphasis added)</p>

<p>here is the linky: http://en.wikipedia.org/wiki/Digital_gold_bug</p>

<p> </p>
 
<p>lawyerliz,</p>

<p>His argument is that when the American consumer stops spending to buy goods the other countries that are not spending now will start using all the money we have exported to them to increase thier spending - i.e., increasing thier own quality of life. This does make sense in some ways to me - at some point people will want what we have - and if we can't pay the premium anymore for it but thier own people can they will just sell it to themselves. </p>

<p>However, good point about investing where you know - basic rule easily forgotten!</p>

<p> </p>
 
<p>Yeah, but I doubt that the Chinese want to sell Barbie dolls and Elmos to each other.</p>

<p>They are geared up to sell stuff that we want, not stuff that putative Chinese consumers would want.</p>

<p>And they don't have the middle class (much anyway) that we have that's assigned to buy stuff.</p>

<p>If anything Chinese rich are even more stingy than American bosses, so who's gonna spend?</p>
 
The amount of gold added to the overall supply through mining is fairly consistent and varies in the long term due to long term price fluctuations in the gold price. If the price goes up, miners will produce more and if the price goes down, miners will produce less. But, miners can only produce more output after large expenditures of capital, equipment and planning. Output due to price increases can take years. New discoveries have little to no effect on the gold price. The location of deposits are known, but depending on the gold price, it may or may not be profitable to mine and produce a useful product. The cost of energy is a huge factor in the price of gold production. Even though the price of gold has risen lately, some miners have decreased production.

<p>

Price fluctuation of gold due to doom and gloom preaching by gold bugs is negligible, as is any price movement due to industrial use.<p>

There are some price movements which are seasonal due to Indian seasonal celebrations.<p>

There can be larger price fluctuations from central bank leasing of gold to investment banks who then sell short in the futures market.<p>

But, by far the largest influence on the price of gold is investment demand or the lack therof. Investment demand is driven by investor psychology of the relative worth of currencies, mostly the dollar since it is presently a world reserve currency. Observers of the gold price lately would notice that gold is also now responding to other currencies and oil which in some manner can also be considered a world reserve currency.<p>

The price of gold has moved up drastically in the last few years when measured against dollars, euros, yen, any other currency, and any US based stock index. It has been stable compared to oil and some foreign stock indices.<p>

I do not care to persuade anyone to buy gold, except my family and close friends. I will not sell you my gold.<p>

I do not know how to attach charts, but if you want to understand the <b>real</b> reason gold and oil are appreciating, bring up a chart of the $US for the last couple of years. Maybe gold is not becoming more valuable, and instead maybe the dollar is just becoming less so.

<p>

I do not have a link to any of the above because I wrote it myself.<p>

"Diversify, diversify, diversify", and "buy and hold, buy and hold, buy and hold" serve only commission based Wall Street who enrich themselves while the masses attain mediocre returns or losses on an inflation adjusted basis. In order to obtain decent returns, one needs to actually think and do research instead of repeat nonsense heard on Cramer or read on Wikipedia.
 
<p>Although I agree with Schiff's prognostication, I have yet to determine how to, where to, or if to implement this strategy in my portfolio. Are people really liquidating their holdings and moving everything into Euro Pacific Capital? I have a hard time believing people with sizable investments are doing just this and that is why I am struggling because people like Buffett can not possibly be. So, how much of Schiff's strategy should be implemented in one's portfolio? I already have 15% in precious metals (more than half of which in tax advantaged accounts) and 37% in emerging markets and foreign large-cap growth funds (US denominated ) .</p>

<p>On top of all that, I'm considering increasing my BRK-B holdings because obviously this guy will be able to steer me through a major catastrophe, right? Many in the IHB community have started off as housing bears and moved into overall market/economy bears so I guess I am curious if anyone else has followed Schiff's advice and how they implemented it into their portfolio. To date, Chuck Ponzi is the only one I know of who has actually invested in Euro Pacific Capital. Anyone have more than I do in precious metals? And what do you folks think about pouring more into Berkshire Hathaway, Inc.?</p>

<p> </p>

<p>Edit: Fixed some punctuation.</p>
 
<p>awgee: I actually saw some charts showing price of gold consistently going up for the last 5 years. I think that investing in gold is just as risky as in any type of security (think Enron stock, which was consistently going up until it collapsed) and returns are not guaranteed. I personally wouldn't buy just because it is a safety concern to keep large amounts of gold in your house (hope you keep that in a safe place). More power to you if you are right... I don't believe in stock market too, only in bonds and CDs :))</p>
 
I read the other book called "Dollar Collapse" by a similar author and I have to say I wish I had read it about 2 years earlier. Every single thing he said was going to happen came true. He said buy as much gold as you can get your hands on at $375-400, I think it was....
 
movingaround - Berkshire Hathaway, class b stock.<p>

blackacre-seeker - It is all about the timing. At times gold is less risky and will appreciate and at times it is very risky and will depreciate. Do you consider bond and CD "returns to be guaranteed"? In real as opposed to nominal dollars?<p>

By the way, I agree, at some point in time, the price of gold will collapse and it will be as risky or more risky than some securities. Do you consider leveraged, (mortgaged), real estate to be risky? What is it you don't believe about the stock market?
 
<p>Not really, gold is WAY too expensive right now. I invested in both gold and silver and have sold both. If you look at the price history chart it looks something like the housing market. Right now it is fluctuating. The big gains are probably over... Anyways good luck</p>

<p>-bix</p>
 
awgee,





I have been pondering the whole deflation thing, and I wonder how it would be measured if we went into a worldwide recession or depression. Traditionally, in such a scenario, all asset classes would fall relative to gold, but what if gold is no longer considered the standard? If all fiat currencies experience deflation due to the collapse of what appears to be a nearly worldwide housing bubble (or at least the export of our toxic mortgage paper,) what happens when all currencies deflate? I am not setting you up, I am really wondering?
 
awgee,

"Do you consider bond and CD "returns to be guaranteed"? In real as opposed to nominal dollars?" -I have no idea what you are talking about here, can you pls elaborate? :)

"Do you consider leveraged, (mortgaged), real estate to be risky?"-Yeah, if the bank owns all or most of the property, the bank will bear the risk (you only has your FICO score to lose if you walk away). Owner be aware :)

"What is it you don't believe about the stock market?" Playing on a stock market is all about luck. If you really know how this company is going to do, you are engaging in insider trading. If you are just like the rest of the investors, you read tons of info, buy stock, and hope you are right. This is something you personally have no influence over, why would you want to invest your money in something you can't control? I pulled my entire investment out of various mutual funds where I was losing thousands and invested in bonds. Now when everybody is crying about how much money they lost after buying various securities (especially those packaged mortgages, don't remember the correct term), I look at my earnings (small but steady) on my 401k and think "gee, there was time when I was that naive..."

Past performance is not prediction of future results, ain't that the truth? :)
 
<p><em>"Diversification is a protection against ignorance. It makes very little sense for those who know what they're doing."</em></p>

<p><em>Warren Buffett</em></p>

Here is the chartporn awgee requested:





<img alt="" src="http://img108.mytextgraphics.com/photolava/2007/12/31/2007markets-490wvxk55.jpg" />





I shifted my retirement accounts more to the foreign side two years ago. I also have bought and sold metals. Currently I still hold gold. Domestically I hold consumer staple ETFs and JSVAX and CGMFX. <a href="http://money.cnn.com/news/newsfeeds/articles/newstex/IBD-0001-21970470.htm">Ken Heebner is great</a>, and ironically shorted some of the same stocks I bought puts on.





<p><em>Focus' most distinctive step in 2007 was shorting, which involves bets that stocks will fall in value. And the fund racked up big gains by shorting stocks that were hurt by the subprime lending mess.</em></p>

<p><em>It sold short Countrywide Financial (NYSE:CFC) <ticker>CFC</ticker> in at least the first three quarters of the year. The fund does not disclose prices at which it borrows stocks for later resale. But during 2007, the stock lost 79% in value.</em></p>

<p><em>The fund shorted Sears Holdings (NASDAQ:SHLD) <ticker>SHLD</ticker> in the third quarter. In that period alone, Sears fell 25%.</em></p>

<p><em>The fund shorted IndyMac Bancorp (NYSE:IMB) <ticker>IMB</ticker> and Firstfed Financial (NYSE:FED) <ticker>FED</ticker> in Q1 and Q2. It went short on BankUnited Financial (NASDAQ:BKUNA) <ticker>BKUNA</ticker> in Q1.</em></p>
 
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