Where to invest proceeds from sale of home

[powayseller]

Does anyone have any input on where to put the proceeds from the sale of my home? With the housing bubble bursting, there’ll be fewer MEWs and thus fewer purchases from China, and probably there’ll be a recession coming up, esp. since it’s been too many years since we had one. Will the dollar fall rapidly?

Should I buy euros? Everbank has FDIC insured accounts in many currencies, but the euro pays only 1% interest. Or gold/precious metal funds, such as SteetTracks gold shares, or Vanguard’s precious metal index fund? Perhaps a contrary real estate fund, like the Profunds Short Real Estate fund (although their prospectus does not state what they hold). Is gold the next bubble?

This may be off topic, but just as the stock market bubble morphed into the housing bubble, I think there could be another bubble in another product.

Thanks for any responses.
ening.

[Jim Brubaker]

It is a toss up right now.

We are on the edge of a sword. Fall to one side and its deflation fall to the other, hyperinflation.

I don’t know how much you have in funds to invest, but here is a link to treasury bills, which you can buy directly and you don’t have to mess around with the banks $100,000 fdic insurance limit
http://www.publicdebt.treas.gov/sec/sectndr.htm

I would recommend the 3 month t-bills which are renewable and stagger them so they don’t come due all at once.
I’d also recommend putting 10% of your assets in gold, which ever way the market goes, the price of gold should move one decimal point in 20 years.

Cash could be king in the near future, If people default on their bills, interest rates have to go up.

Having a high liquidity is a rare state to be in for most people today, I would hold on to the cash and wait
opportunity is close by.

[powayseller]

Would the dollar lose value if the Fed lowers the interest rates? I thought gold could be the next bubble, and could buy some of that.

I read on calculatedrisk.org:
“As the economy slows, this will reduce the trade deficit and also lower the amount of foreign dollars willing to invest in the US – the start of a possible vicious cycle.” With less foreign investment, the Fed will have to raise interest rates, which would further depress housing prices and home equity withdrawals, lowering imports and the trade deficit, leading to less foreign investment and so on in a vicious cycle.

Wouldn’t this lead to higher long-term rates, which are required to induce foreign central banks to buy long-term treasuries, and also a global recession, as demand is reduced for foreign goods?

[Anonymous]

As Rich has summed up, commodities in general and precious metals in particular will likely be the next bubble.

Poor Ben Bernanke – after Greenspan gets fun bubbles like stocks and then housing, Ben gets stuck with high energy prices that everyone hates, and high gold prices that nobody understands … except for a select few that will be justly rewarded.

[Doofrat]

What is the best venue to buy and hold gold? I’ve seen all sorts of different ways to do it on the Internet, but am at a total loss as to which ways are the best.

[Anonymous]

If you want to hold gold coins, I’d recommend buying 1 ounce American Eagles from California Numismatic Investments (you can buy physical silver there too). I’ve worked with them over the years and have never had any problems.
If you have enough of these that you are uncomfortable hiding them in your house, get a safe deposit box.
I think everyone should own at least a few 1 ounce gold coins, just to know what real money feels like.
Other alternatives are buying GLD or CEF, or opening an account at GoldMoney.com.

[lewman]

Shanghai House Prices

Stephan, I live in Beijing now and am interested to keep my eyes out for Shanghai property prices. Have you got any reliable source to go by ?

Lewis

[lewman]

Diversification is the only golden rule when it comes to investments.

One of my themes over the next few years will be the drop of USD. Twin deficits coupled with 1) a slow down of the economy and 2) the world’s central banks saying they’ve got enough USD in their reserves already and therefore will reduce purchase of US treasuries. In 2005, USD rebounded due probably to 1) a tax break for US corporations to repatriate profits back to the US but this is now over and 2) a technical rebound from the past several years’ decline.

I like currencies with a commodity theme and that includes Canadian Dollar, Australian Dollar & New Zealand dollar.

[lewman]

Rich, agreed. at least half my investment portfolio’s in non-USD assets. The US’s like a person with a maxed out credit card and an accident waiting to happen.

[Anonymous]

I’m not a gold “bug” but I believe it’s prudent to hold some, at least a coupla coins.

there’s multiple ways to own gold:
* bullion as coins in your possession
* ETFs like GLD and IAU
* a buy/hold service like bullionvault.com where you own shares of large bars held in three different Brinks vaults (NY, London, Zurich).

gold coins are easy to buy, hold and sell. bars are not, and physical bars are hard to sell if they’re outside a vetted store.

I have a few coins on the way, but that’s it so far. if I were to buy more gold, it would probably be an ETF or shares in a vault. I’d definitely do the latter held in an offshore vault if the dung hits the fan.

oh and FXE is a Euro ETF, which to me is a less-hassle way to buy Euros than opening an Everbank CD, but that’s just me. I’ll probably be buying some of that soon.

[ybbor]

A few things…Be wary of putting things you may need in a safe deposit box. This little piece of knowledge is being kept on the ‘down low’, and I don’t blame them.

http://economist.mrwhipper.com/?p=10

A family member from Irvine, CA (who’s a branch manager at Bank of America) told us two weeks ago that her bank held a “workshop” where the last two days were dedicated to discussing their bank’s new security measures. During these last two days, the workshop included members from the Homeland Security Office who instructed them on how to field calls from customers and what they are to tell them in the event of a national disaster. She said they were told how only agents from Homeland Security (during such an event) would be in charge of opening safe deposit boxes and determining what items would be given to bank customers.

At this point they were told that no weapons, cash, gold, or silver will be allowed to leave the bank – only various paperwork will be given to its owners. After discussing the matter with them at length, she and the other employees were then told not to discuss the subject with anyone.

The family member has since given her notice to quit the bank.

Also, a nice tidbit about the dollar and Iran

Most Americans probably don’t worry about Iran too much. Talk of it developing a nuclear bomb probably strikes a raw nerve—especially coupled with the Iranian president’s anti-Jew comments. But with our hectic lives, we have little time to think about it. The trouble is, Iran has been thinking a lot about you. Its leaders are keen on America’s destruction—and that means you. That’s why one of the most underreported stories of 2006 deserves America’s attention.

In March 2006, Iran is planning to launch an oil bourse. As it is understood, the bourse (a trading mechanism where someone sells and another buys) will sell oil in euros. Iran seeks to strike at the twin pillars of U.S. economic dominance: dollar reserves and confidence in the American economy.

My Blog
http://economist.mrwhipper.com/

[powayseller]

yyob – The story of “your relative” is one of the many internet hoaxes floating around. I just did a search on this claim, and found that exact text in numerous websites.

It is prudent to not plagiarize. If you quote someone, list your source. If you can’t find one, don’t bother writing it.

[Anonymous]

spam

[Anonymous]

spam

[Anonymous]

spam

[Author]

Posts