Size Matters

125
Mon, Jul 28, 2014 - 11:49pm

Are you well endowed with a large stack?

As a young ignorant professor, I accepted a position at a college that offered me a job as an "endowed chair of mass communication." They made verbal promises that the endowment would be funded. Well you know what happened… they never endowed it. The “benefactor” had not made the large donation promised and the contract specified it would not be made until she passed away. I had lunch with her one day. She was not that old and in fine health. I should have called CALawyer for advice at that point.

But that small branch of a larger university really wanted to be noticed, so they set up the position anyway. I used to ask for money each year. I told my department chair, “I have this professorship, but I am not well-endowed. He chuckled and then said, “Yes, but in this case, size matters.”

Size also matters with getting ready for the future. This past weekend Gamble put the question to everyone, “How much physical is enough? I thought I was good until I saw a picture of someone's stack, I think there was over a hundred ounces!

First of all, it is never good to compare your metal endowment to pictures others. It can be depressing and guys shouldn’t do that. When I was in college my roommate was a body-builder and he would look at pictures of the muscle-bound hunks flexing their tanned oiled bodies, and it inspired him to work out more. Well in his case, that inspiration was effective because he had a body type that responded to weight-lifting. He was born with it! In my case, no matter how much I worked out (and I did lift with him every day after class), my biceps remained “unimpressive,” as the girls termed it. But I did get strong. Some guys just have a body that will bulk up, and some do not. As for stacking silver, no matter how much I gaze at piles of the shiny metals in my monthly subscription to Stacker magazine, I am unable to get more fiat into my budget to enable a trip down to the LCS without some work or a sensible business deal.

Fortunately, our metals endowments that we are building for ourselves and our families depend not on our body type or someone else’s gift, but on our own desire, needs, and ingenuity in earning the fiat to make the endowment grow.

But a couple of members provided some concrete answers for Gamble:

Erewenguy offered a formula for old guys: “Personally, I am about 65% paper, 25% pm, 10% cash, but then, I'm an "old" guy. At this point in my life living expenses are pretty modest and most new free cash goes into metals for savings rather than for insurance.” I’ll second that formula. My budget is about the same 55% in real estate, 40% in PMs and 5% cash & prep. If the cash grows, it will be allocated appropriately

Icarus also provided a sensible formula for anyone: “your stack times 5 (the estimated appreciation in purchasing power) should be enough to cover all your expenses with a 4% withdrawal rate, assuming that all your government pensions go away.” Simply figure in how many years you’ll need to be supported by that stack and work it in the formula.

Many of us are on a budget and building up a nice stack is not easy. At least it is cheaper these days. A few months after I began in late 2010 I was lamenting that I couldn’t get any silver for under per ounce, that I would have bought much more at if I had only known. When I go to the LCS, I want to be a big player, talk about silver prices and seem important to them. I want to feel the heft of the larger bars, or inspect the gold coins. But as soon as I drift to the cull box of old Morgans or look at the odd generic rounds, they turn remind me to hurry up and make my selection.

But is having the largest stack possible always the best? My wife is far less concerned with the size of my endowment than other factors. She wants to pay off the house and store away enough food and other necessary goods so that we do not struggle to survive. She would rather stock up on toilet paper, toothpaste, her special feminine cabinet in the bathroom, cleaning supplies, an extra broom, detergent, bleach and other such stuff. But my vain heart would much rather go to the coin or gun shop to get things I may need, rather than Wal-mart to get things I will need.

Dr Jerome: Hey honey, how about tonight we go out to dinner, a movie, and then, you know, the kids will be at their friend’s apartment, and we can, you know …

Mrs Jerome: Well, Romeo, we could do that if you hadn’t spent all our money on silver, cutting short our “personal pharmaceutical” budget, you know… with the next one, you get to nurse and change all the diapers.

So clearly we need to prepare in other ways to augment our stacks of metals. The prices of some goods will inflate as the dollar declines, but the prices of other goods may remain somewhat stable or even deflate. As a part time real estate investor, I am expecting the price of homes to continue to languish and perhaps even fall. I will be waiting with my modest stack when they hit bottom again. The family is growing. My son has a serious girlfriend. And while I may refuse to answer the door in our new economy when certain in-laws come knocking, I won’t turn away my kids and their new families. But more people under the roof will require more beds and at least a little more room. So I value diversity in investing—metals are good, but not neglecting everything else we need to feel civilized and care for those we love.

Even though I already said that size matters, it might be best to diversify rather than having the biggest stack possible, because size isn’t everything. Lately, I have had more time than fiat, so we are continuing to prepare our home, building a small storage area off the back porch, still working on my solar system. The materials can be found on Craigslist or at a used building supply near the home, making the projects very affordable. But If I drop my extra fiat for the month on metal, my tools sit idle and the home remains unfinished.

The problem of metal storage seems to be taken seriously here. In response to Gamble’s query, hindsight101 asked, “One issue for me is safe storage. Banks aren't safe. Is one's home safe? How well can it be hidden? How likely are you to reveal the hiding place with a gun to your head?

Those are good questions for all of us to think about. We have all heard the stories about home invasions. As I get older, I am not so sure I want to challenge a gang of thugs who kick down my door, even with a self-protective gear. I have been wondering if a “faux stack” (imported from China perhaps) in a poorly hidden safe would satisfy a burglar while my real stack is hidden elsewhere.

Silver stacks are heavy. Getting it off the bottom of my pond is a real chore, requiring me to dive down, feel around in the mud until I find it, come back up for another breath, go back down, tie on a rope, then get my son in a second boat to help me haul it up. The silver I hid up in the tree is easier to get down, but took me all day to get it up there. My next project is creating a watertight container that I can lower down into my septic tank. Maybe I should just install a “dummy” double switchbox labeled “security lights” by the back door and keep my gold coins in it.

My best protection is secrecy. I don’t want to call attention to my home or let anyone know I am storing anything of value in my pond, tree, or septic tank.

So we are trying to find that balance between accumulating sufficient metal of an unknown quantity that will ease our transition into the new economy. We had some wise advice posted in the thread the other night that I hope will be reiterated here. How much of stack you should have depends on several factors

  • Silver or gold? Silver has more upside potential. Gold is more stable.
  • How old are you?
  • How many people will be depending on you and how old are they?
  • Do you believe the collapse will be fast, total and disastrous? Or will it be slower, partial, and simply force us into a lower standard of living?
  • Will current debt be written off? Will you get off the hook for your mortgage, or will a bank come take your home after the new economy begins?
  • Will bankruptcy laws still apply? Better not count on it.
  • What do you want your standard of living to be?

Personally, I am working to settle my debts before a collapse. The last thing I want are banksters hounding me after a new economy begins—especially if they suspect I am holding out a stack somewhere based on my IP address and participation here. We have no guarantees that your bank loans will be forgiven or written down. If my mortgage company collapses, the note will be purchased nad the new holder will seek repayment—perhaps in revaluated currency. We should expect that the banks will survive and will still have government lapdogs to help them squeeze their debtors. And if you don’t like our government now, just wait until they improve it (for your own good) after the next collapse.

I am stacking and prepping in stages. We initially stacked with all we could (at high prices, I might add) and then started prepping. Later, after the price fell, we switched to stacking more. These days we are back to prepping for the lifestyle we want, with the perspective of our age and trajectory of our children’s lives.

As for metals trading, I have been trading JDST (short 3x ETF) and JNUG (long 3x ETF) with some success, taking profits when I call it right, holding on for the ride when I am wrong. So far so good. I just can’t seem to get trading out of my blood. It keeps me engaged in the site and the metals world more than just simply stacking. Besides, what else will I do with my employer IRA? BTATFH?* I suspect the fund will be MyRA’d* someday no matter what I do with it.

Well, I have asked more questions than I have answered here, but the answers are different for all of us.

As for stacking, yes, bigger is better. You will be thankful for every ounce you were able to add to your endowment. But do not neglect the toilet paper and a roof over your head.

Hey honey, about that date?

* Buy the all time f---ing high.

* the act of government herding of all IRAs into T-bills someday

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Spartacus Rex
Jul 29, 2014 - 4:47pm

Libor rate overhaul launched by UK regulator

“The existing structure and governance of Libor is no longer fit for purpose and reform is needed,” the FSA’s managing director, Martin Wheatley, said.

“It’s completely untenable that we can go forward without some level of regulatory change,” Wheatley added.

The future of other benchmarks—for everything from oil and gold to stock prices—was also under scrutiny, he told a Bloomberg News event.

https://www.thestar.com/business/2012/08/10/libor_rate_overhaul_launched...

ancientmoneycashonly
Jul 29, 2014 - 4:41pm

cashonly re: war to solve the "dollar problem"

It certainly appears that the neocons running the show will risk war to possibly maintain the dollar's position as reserve currency. Only a coup de etat that eliminates the top echelons of the government, and their connection to the banksters pulling their strings can prevent it.

If we had one measly U.S. congressman worth his salt, (s)he would simply introduce a bill that strikes down the Federal tax withholding laws. Just the introduction of such a bill, along with the reasoning behind it, might wake up a few folks. Starve the beast.

The withholding law is what allowed the government to get so huge and powerful. If everyone was able to keep their whole paycheck, and then write a check to Uncle Sam for their taxes, they might question what the hell those A-holes are doing.

Of course, their livelihood is paid by taxpayers, so the laws will not change.

Still, maybe it's not too late to regain the republic for the people. We can hope, but it will take more than hope.

ag1969
Jul 29, 2014 - 4:39pm

Cash only, credit is money

Boy, I learned that lesson myself but could never have put into words as eloquently as you have. My business was a little different though, people were using equity lines not credit cards. I had a home improvement company and was up to $3.5 million in sales and hugely profitable. I had it down to a science, I knew my exact cost per sale in media advertising and could buy as much volume as I wanted for said cost per sale. I, unlike you however, didn't see the writing on the wall. I was offered, at the end of 2006, an amount of money for my business that to most people here is an incredible amount of money. What did I do? I said fuck it, I am still young, if I do this for a few more years I will be able to sell it for three times as much, and I doubled down, bought buildings, expanded into new markets over the course of 07 and the beginning of 08, and the day after the TARP bailout was announced, my phone literally stopped ringing. It was not until after that I realized I was selling a product that people only bought with home equity money. When it came down to spending their own, hard earned money, I fell to the absolute bottom of the priority list. By 2009, despite many new markets and a dramatically increased advertising budget to cover new markets, my sales fell to under a million.I spent my life savings, (which was still substantial at the time despite losing 6 figures in the dot com bubble burst) keeping my advertising going and my employees paid. I spent every penny of savings, faith, and credit thinking things would get better and go back to the way they used to be, buying volume on a relatively fixed cost per sale. Those were the days when silver was $5 an ounce, and $5 seemed like nothing to me, so I would drink 3 ounces of silver/day in the form of Starbucks Lattes. Just further proof that idiots can make money from time to time. Oh well. Coulda woulda shoulda.

What have I learned? Stuff is a burden, health is wealth, and family is the greatest thing in the world. I stack to protect my family. I am not worried about losing fiat because I am a battle tested expert at that. My worries are about harm coming to my family as a result of everyone else losing all their fiat. People will get pretty ornery when they can no longer afford their starbucks.

Spartacus Rex
Jul 29, 2014 - 4:38pm

LMAO

Trader Dan: "Silver is bucking the lower trend in commodities today for some reason. Frankly, I do not know why nor do I care. "

Spartacus Rex
Jul 29, 2014 - 4:25pm
Spartacus Rex
Jul 29, 2014 - 4:22pm

About 77 million Americans have a debt in collections...

A third of consumers with credit files had debts in collections last year

That amounts to 35 percent of consumers with credit files or data reported to a major credit bureau, according to the study released Tuesday by theUrban Institute and Encore Capital Group's Consumer Credit Research Institute. "It’s a stunning number," said Caroline Ratcliffe, senior fellow at the Urban Institute and author of the report. "And it threads through nearly all communities."

https://www.washingtonpost.com/blogs/wonkblog/wp/2014/07/29/a-third-of-c...

cashonlyancientmoney
Jul 29, 2014 - 4:19pm

ancient money

Thanks for the post as this is starting to make more and more sense to me. The BRICS are for real and can without a doubt harm the dollar. Someone must pay, but who? Russia makes the most sense as a war with China will only harm the US corps in China and the businesses back home. The other countries are too weak and have nothing to offer afterward.

This is right out of the Sun Tzu art of war play book: kill a chicken, scare the monkeys. It would show China and the world how far we'd go to protect the right to CREATE MONEY! Anything left of Russia will be under control to make sure that the energy sold is US dollar approved.

I guess the whole "MAD" concept is out the window then. Man this is bad just thinking about it.

Spartacus Rex
Jul 29, 2014 - 4:05pm

@ buzlightening... Mmmm, Not Quite Correct.

Re:

"One silver dollar of around .77 silver would be an average good days wage for real money normal times. "

"Average home prices before the dead head fed would put on average a median priced abode at 400 ounces of silver compared to 40 ounces of gold or 10 to 1 ratio was likely more the mean normally."

WTH? Your recollection of pre-Phed Reserve U.S. History and Math is a bit fuzzy there Buz. Exactly what are you relying upon as sources of information/ reference?

Cheers, S. Rex

cashonly
Jul 29, 2014 - 3:59pm

Dr Jerome

I worked my tail off to build the business up to the point I could get my partner and father to buy me out!! I had to sell since the employees were the worst and I couldn't take on any more debt load. I was lucky as I was out in just 18 months!! I was working 60 -70 hours weekly and my partner was down to just 10 hours right before the sale. In just 2 years after my exit the business was no longer profitable and was first leased out then everything was sold off at auction.

I didn't follow my gut instinct right in the beginning and run away. My pain of losing jobs was turned into a determination of holding the future in my hands. My instincts have never ever failed me and sadly my instincts are ringing louder than ever right now.

Spartacus Rex
Jul 29, 2014 - 3:48pm

Pam Martens and Russ Martens: July 29, 2014

Wall Street Journal Reporter: “The Entire United States Market Has Become One Vast Dark Pool”

Excerpt:

"

After its coddlers gave Wall Street its own court system, removed from the prying eyes of the nation’s justice system and the press, Wall Street was ready to begin repealing every other layer of investor protection that had been enacted after Wall Street’s wholesale looting of the country in the late 20s and early 30s. The most dangerous repeal, of course, was the repeal of the Glass-Steagall Act which had barred Wall Street firms that gambled in stocks from owning insured deposit banks. Today, the largest trading houses on Wall Street are under the same corporate umbrella as the nation’s largest banks: JPMorgan owns Chase bank; Citigroup owns Citibank; Bank of America owns Merrill Lynch.

In JPMorgan’s London Whale episode, the firm taught us why Wall Street trading houses were so engaged for decades in lobbying to repeal the Glass-Steagall Act. JPMorgan had used hundreds of billions of dollars of its Chase bank depositors’ funds to make high-risk bets in derivatives in London. It lost those bets to the tune of $6.2 billion. In the years when JPMorgan had won those bets with depositor funds, it kept the profits for the house and richly rewarded its executives with outsized compensation and bonuses. Simply stated, the repeal of Glass-Steagall allowed the use of other people’s money to enshrine heads-we-win/tails-you-lose on Wall Street."

Read the whole story@ https://wallstreetonparade.com/2014/07/wall-street-journal-reporter-the-...

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