Podcast on Investing in Gold and Silver

[Jake]

I thought you guys might enjoy this podcast discussion on investing in gold and silver. It's a chat I had with some investor friends about a variety of issues around precious metals, such as gold vs silver, the role of precious metals within a portfolio and views on when to sell speculative investments in precious metals.

Webpage: http://thevoluntarylife.blogspot.com/20 ... ilver.html
MP3: http://thevoluntarylife.com/investing_i ... silver.mp3

[dualstow]

Downloading, thanks!

[MediumTex]

Thanks for posting Jake.

BTW, every time I look at your avatar I think I am seeing Marty Feldman in "Young Frankenstein."

[Jake]

Thanks for posting Jake.

BTW, every time I look at your avatar I think I am seeing Marty Feldman in "Young Frankenstein."

Hehe that's hilarious! Maybe I should replace my current avatar with that one The current avatar is Rob De Niro as the character Tuttle in the movie Brazil

[MediumTex]

Thanks for posting Jake.

BTW, every time I look at your avatar I think I am seeing Marty Feldman in "Young Frankenstein."

Hehe that's hilarious! Maybe I should replace my current avatar with that one The current avatar is Rob De Niro as the character Tuttle in the movie Brazil

Thanks for reminding me of that great role.

When I first saw Brazil many years ago it was De Niro's role that most resonated with me.  I thought the premise of an outlaw heating repairman was hilarious and a great part of the movie's overall social commentary.

Here is a 2:38 clip from the movie if you aren't familiar with Tuttle:

http://youtu.be/dht_3NziwSw

[dualstow]

What a great English accent, by the way. (The podcaster, not DeNiro in the ducts).

[Jake]

When I first saw Brazil many years ago it was De Niro's role that most resonated with me.  I thought the premise of an outlaw heating repairman was hilarious and a great part of the movie's overall social commentary.

My thoughts exactly. That's why I chose the avatar

What a great English accent, by the way. (The podcaster, not DeNiro in the ducts).

Thanks, that's me!

[MediumTex]

What a great English accent, by the way. (The podcaster, not DeNiro in the ducts).

Thanks, that's me!

One of Britain's most interesting exports are those silky smooth BBC-type announcer voices.

I'm sure that speaking like that must easily add 20 points to one's IQ.

The British seem to have a more subtle and nuanced relationship with language in general.  This comes through in the spoken word as well as written word. 

Even when a British person is slobbering drunk, there is a certain articulateness that still comes through.  What for a U.S. drunk person might just be a series of grunts and and gibberish can come out of the mouth of an intoxicated Englishman as a clever commentary on one's private parts, lineage and political beliefs.

I always enjoy watching British Parliament just for the sneering sarcasm and layers of subtext that seem to characterize the whole effort.  Watching the U.S. Congress in session is vastly less interesting.

I mean all of that as a compliment to Jake and his countrymen.

[Jake]

Hehe, thanks Tex!

As to this part:

Even when a British person is slobbering drunk, there is a certain articulateness that still comes through.

I think if you saw some of the british reality tv shows it might change your mind on that count 

[gizmo_rat]

One of Britain's most interesting exports are those silky smooth BBC-type announcer voices.

I'm sure that speaking like that must easily add 20 points to one's IQ.

I suspect what you're thinking of as a British accent is so called "received pronunciation" or "BBC english"

From wikipedia

[RP] has thus been the accent of those with power, money and influence since the early to mid 20th century, though it has more recently been criticised as a symbol of undeserved privilege []; in some contexts conservative RP is now perceived negatively.

https://en.wikipedia.org/wiki/Received_Pronunciation

In reality most people in Britain speak with a rich variety of accents and dialects that seems to change every 100 miles or so.

As a random example here's two people arguing about a minor traffic incident in Bristol (about 100 miles west of London).

http://www.youtube.com/watch?v=QWXndP5zP58

The further you go from London the richer it gets, by the time you get to the highlands of Scotland...

Without labouring the point, much what gets exported from Britain is the silky smooth voice of politicians, bankers and other establishment sirens, who historically speaking are the last people you'd give an assumption of (benign) intelligence to.   

[stone]

In the UK for tele-sales, call centres etc the North East accent is preferred apparently. Cheryl Cole is our ultimate beloved national treasure. The UK was in a state of utter shock when our version of perfection was rejected by US TV:
http://www.dailymail.co.uk/tvshowbiz/ar ... ccent.html

[stone]

English accent audio clips: http://web.ku.edu/~idea/europe/england/england.htm

[dualstow]

English accent audio clips: http://web.ku.edu/~idea/europe/england/england.htm

Awesome resource, thanks. By the way, my wife has perfect "received pronunciation" when she speaks English, although she is not English herself.
She got it from BBC announcers (well, not Lyse Doucet, obviously. ;-) ) Edit: I see that Gizmo already wrote about RP above. Didn't even see that when I posted.

Jake, I realized early on in the podcast that your friends have no strategy. (My first clue was when one of them said, "I wish I could say I have a strategy.") But, it was fun to listen to, nonetheless.

[Jake]

Jake, I realized early on in the podcast that your friends have no strategy. (My first clue was when one of them said, "I wish I could say I have a strategy.") But, it was fun to listen to, nonetheless.

Yes that was a comedy moment. Although one person clearly didn't, I think the others do have a strategy *of sorts*. They hold 90% of their portfolio in precious metals because they think the SHTF/hyperinflation scenario is the most likely. They keep that 2/3 in silver and 1/3 gold, mainly because they think silver is undervalued relative to gold and so has higher to climb. Their strategy for when they will sell is "when everyone is talking about gold and silver and when there are lines around the block at coin shops". At that point they will sell and move into real estate or some other tangible asset.

Of course from our PP perspective there are massive problems with this. It doesn't qualify as a strategy for me in the way that the PP does, but it is probably quite typical of what many other 'gold bugs' are doing.

[stone]

Jake, in that discussion it seemed to be taken as given that things would descend into a hyperinflation "event". I'm really wondering whether a Japanese style perma-slump might be just as likely with the gold price climbing at above inflation rates until the value of gold equates roughly to the value of government debt outstanding. So a sort of inadvertant resumption of a defacto gold standard by stealth. If that is what happens, then I'm not sure that silver would keep up with gold. Gold has overtaken the purely industrial precious metals such as platinum and paladium because the monetary use of gold doesn't apply to them. Perhaps silver will similarly get left behind if much of the silver price depends on industrial demand and industry will only pay a price in effect pegged to relatively stagnant general prices (there is a balooning amount of financial assets but not a balooning amount of money for consumption by customers for practical stuff).

I also presumed that something as volatile as silver would have the potential for plenty of "rebalancing bonus" type volatility gains when held with other assets. I was really struck at how your friends seemed somewhat oblivious to that. I assumed that inorder to make use of silver as an asset it would take rebalancing several times a year Last year silver was flat for the year but gyrated wildly. I guess a  regularly rebalanced 50% cash: 50% silver portfolio  would have done quite well last year

[Jake]

Jake, in that discussion it seemed to be taken as given that things would descend into a hyperinflation "event". I'm really wondering whether a Japanese style perma-slump might be just as likely with the gold price climbing at above inflation rates until the value of gold equates roughly to the value of government debt outstanding. So a sort of inadvertant resumption of a defacto gold standard by stealth. If that is what happens, then I'm not sure that silver would keep up with gold. Gold has overtaken the purely industrial precious metals such as platinum and paladium because the monetary use of gold doesn't apply to them. Perhaps silver will similarly get left behind if much of the silver price depends on industrial demand and industry will only pay a price in effect pegged to relatively stagnant general prices (there is a balooning amount of financial assets but not a balooning amount of money for consumption by customers for practical stuff).

I also presumed that something as volatile as silver would have the potential for plenty of "rebalancing bonus" type volatility gains when held with other assets. I was really struck at how your friends seemed somewhat oblivious to that. I assumed that inorder to make use of silver as an asset it would take rebalancing several times a year Last year silver was flat for the year but gyrated wildly. I guess a  regularly rebalanced 50% cash: 50% silver portfolio  would have done quite well last year

I agree. If I could be certain that some kind of hyperinflation event would happen in the next couple of years, I would put everything in precious metals too. But I can't so I'm sticking with the PP.

With regard to silver, I've heard precious metals enthusiasts make both pro and con arguments as to whether the industrial demand is something that they think is useful. It seems clear to me that you want silver for it's monetary value and the industrial demand is an unwelcome complication, as that industrial demand will likely fall in a recession or depression scenario.

As for rebalancing, I think you either get the idea that you need an objective rebalancing strategy that utilises really different asset classes, or you don't get it. If you get that idea, you must ultimately end up with something like the PP if you follow the logic of the argument. If you don't get that idea, you can get stuck in being convinced that one asset class is the long term winner and only seek diversification within that class. So you can be a stocks enthusiast who thinks of diversification across different stocks or a precious metals enthusiast who thinks of diversification as being between gold and silver.

[stone]

Jake

As for rebalancing, I think you either get the idea that you need an objective rebalancing strategy that utilises really different asset classes, or you don't get it.

I wonder what they would make of a coin tossing game where for each round you could toss one or several coins and for each coin "heads" meant a 5x gain of the money staked on that coin whilst "tails" meant an 80% loss of the money staked on that coin and between each round you could "rebalance". Would they choose to put all of their money on a single coin per round?