I think Medium Tex meant that he could have $1k cash in hand in a few hours, during a crisis.  If you sell a mutual fund or and ETF or whatever, it's gonna take 3 days or so to have cash in hand, and that's when everything is running smoothly.  Under the circumstances in which you'd be cashing in go...

It's even snowing here in El Paso...

I think that's true (with regard to the fed's ownership of US debt), but I think that discounts a lot of the side monkey business with derivatives, etc, a lot of which I think that a lot of this is still on the books of a lot of the banks (although I don't really know this for a fact). I don't think...

I think the bottom line is that it's impossible to predict which will we have more of in the futre (inflation or deflation). Deflationary pressure is huge right now b/c of all the bad debt in the form of mortgage backed securities that are still plaguing our financial institutions. So far, we have m...

I am not 100% certain about this but here's my take: You are right about IAU and GLD being similar to VTI or Vanguard Index funds.  You in, theory, should be okay if the parent firm goes broke (unless there's any fraudulent activity, as mentioned by Wonk). GTU is different. It's a close-ended fund. ...

How important do you guys think it is to own physical gold versus gold held in something like GTU or Goldmoney.com or the Perth Mint or something?

Just curious.

Adam

I am very curious to hear what people think about this.  I know HB toyed with the idea of using zeros, but decided against it.  He did mention that, when push comes to shove, they may be okay.  I have to think that you're better off in a 50/50 split of BND and EDV than you are paying taxes on 30 yea...

I think the true definitions of inflation/deflation are simply  an increase (or decrease) in the overall supply of money and credit.  The thing is, there are so many different types of money and credit these days that it becomes deceptive to think in these simple terms.  ie, "We're monetizing d...

Agree completely.  I would also add that holding a hard asset such as gold in your portfolio does wonders for your psychology as an investor.  Helps avoid panic when things get bad.

That being the case, what is it that determines whether an economy inflates or deflates in bad times?  What makes the US different than Zimbabwe or Argentina? 

Adam

Also "Frisby's Bulls and Bears".  The guy is very smart on either side of most economic debates, and therefore a great interviewer.

MT-- Very interesting perspective, and one that strikes me as true.  In inflation, the price of everything, including labor, should go up. I think the argument that someone who was a die hard inflationist may make is that the true definition of inflation is simply an increase in the supply of money ...

It really is a unique time economically.  One the one hand, we seem to be printing enough money to guarantee pretty bad inflation.  On the other, everyone is scared of debt crisis/municipal default (deflationary depression)  Either scenario seems very feasible.  Then again, markets tend to surprise ...

I'd add that buying bonds directly can be educational. 

That's true, so far, but never say never.  Who knows what will happen if some of these foreign nations decide they don't like to import our inflation.  Things can change very quickly. 

Of course, that's the nice thing about the PP...you don't have to try to guess.

Adam

The five year Treasury is at 2%.  You could consider that.  Easier to hold to maturity (shorter term), and better for tax purposes. 

Great info, Lone Wolf.  I guess it's a good idea to keep some cash in something else that's a tiny bit more liquid if you're going to use I-bonds (to rebalance).  It's more the tax benefit I like than anything else.  I am a bit skeptical of the government issuing inflation protected anything.  It's ...

So, why the higher yield for Ibonds?  Is it because you have to hold them for at least one year?  Is it b/c you lose 3 month interest payments if you sell them in under five years? 

Very interesting...do they hold up during deflationary periods?  I saw in Nov of 09 (I think) there was negative inflation.

 

You can't lose your principal with a T-bill either, so what are the questions you should ask yourself when trying to choose between the two?

Right, but what am I comparing the Ibond to?  ie, "I can get 2% + interest from the Ibond versus X% for the ? bill/bond/note?"

That's why Ibonds may be a good idea.  I'm still trying to get a handle on them, though (discussing with Moda on a separate post in the bond section). 

Moda-- I have read on them, and I think I understand how they work.  The thing is, I can't really figure out how the fixed rate is determined.  With T-bills, notes, bonds, at least you can compare the rates of various maturities and get an intuitive idea of why they are what they are.  With the Ibon...

You have roughly 120K, right?  So even if you put 39K in your stock fund that's only 32.5% of your portfolio. The others are each at 22.5%.  When not just make that the bulk or your stock fund, maybe $30-$35K, keep a little cash in the "not so great fund," and then use a T-bill account (or...

[/quote] 1. Total deferral of taxes on interest until redemption (up to 30 years) 2. Zero interest rate risk 3. Zero prinicipal risk 4. Full faith and credit of U.S. government 5. Complete liquidity (redeem at the bank on the corner any time you want) What's not to like? [/quote] Forgive the naive q...