us economy

[mike]

it would behoove one to be investing in precious metals right now... lowest price in a while and they are poised to go up in value quite significantly. you (probably) heard it here first...

[okmister1]

People scream buy precious metals every time there is anything less that rosy about the economy. The problem is that metals rarely produce anyting and are therefore stagnant. They are only worth what people are willing to pay for them while companies (in the form of stocks) are worth what people are willing to pay for their products and the dividends they produce.

[mike]

then buy mining stocks ;)

we're in a war now, with a budget deficit, record trade deficit, and central bank diversification of reserves/petrodollars, at a time where the housing bubble is just beginning to burst. the fed doesn't know whether to alleviate the harm of the bubble by lower rates or fight inflation by raising them. the USD is a commodity, and supply is going up while demand is also going down. i'd rather be in another commodity. shares of stocks are great but they are likely to go down also if the dollar itself is falling.

[okmister1]

Every time people panic and leave the Stock Market for the Metals Markets to protect their investments, it turns out they'd have made more money staying in stocks except for in the shortest of periods. In other words, to make money switching to metals over the broader market you'd have to be able to time the market. That is almost never done successfully.

Treat investments in the market as long term ownership instead of short term churning and deals and you consistantly get a return around 10% compared to 6% or less for "safe" markets like bonds and metals. And maintain a diversified portfolio.

[mike]

that is certainly sound financial advise. but based on what is going now in the us (subprime) and the world (central bank diversification, war, petrodollars, indian/china economic growth) i think it wise to focus on commodities.

[okmister1]

I guess we'll have to agree to disagree. But remember, in 2001 there was a major surge in the idea of buying precious metals after the Dow dropped into the 9000s. It's up almost 50% 6 years later from the post 9/11, tech bubble, accounting scandal lows when that push gained momentum. It's up from the pre drop high by a couple of thousand points as well.

[mike]

we'll see how it weathers the real estate bubble... and dollar bubble(?) - fed dumped in a good chunk of cash this week, good for PMs !