so the stocks respond accordingly.
Gold was almost $300 an ounce when I first started recommending that people buy itâand everyone thought I was crazy. Iâve never backed off, and even as it broke $500, $800, and $1,000 benchmarks, people kept deriding me. But Iâm creating my future, not competing on American Idol .
Donât Listen to the Advice of Most People, Because Most People are Broke
As a rule, commemorative gold and silver coins are not a good investment and donât justify the price they command. But you do want to have a small supply of them for an emergency. In case of a banking system meltdown, trading real gold or silver coins may be the only way to purchase fuel or food in a time of civil unrest. You can keep a small amount in your home safe and some extra in a nearby safe deposit box.
People still ask me if I think gold has peaked and will soon crash. All I know is Iâm not selling any. With the current state of government budgets and currencies, I see no reason that gold canât go to $15,000 an ounce one day. Iâm not saying it will, but I wonât be surprised if it does.
Something Else to Keep in Mind . . .
When they start mining asteroids in space, gold may plummet to $200 an ounce! Someone will take the risk of investing in mining in outer space (Planetary Resources, whose investors include James Cameron and the Google boys, are already in the game), and could develop technology that allows them to bring precious metals back to earth cheaper than it costs to mine them here. That will change the markets in precious metals instantly.
And the same thing will happen in real estate. That oceanfront property you own in Florida will only continue to appreciate, because theyâre not making any more oceanfront land. But when developers start selling ocean- floor property, the market will adjust! And when developers start selling timeshares on the moon, the market will adjust again! And rememberâweâre not talking next century. For some of this, weâre probably not even talking next decade. (Sir Richard Branson and his Virgin Galactic will be flying tourists into space starting in 2013.)
Taking Risks
What makes risky the new safe is taking calculated risks based on sound information and intelligent assumptions. Itâs doesnât mean that you take risks for the sake of risk. So as you prepare your portfolio, hereâs a simple guideline I use for allocating my own investments in terms of risk.
Put 50 percent of your portfolio in no-risk/low-reward investments. That means, theoretically, you canât lose your money; but of course, we know there are no absolutes in this case. The kind of investment Iâm talking about is a savings account or certificate of deposit that comes with a government-backed guarantee. I do feel secure enough with precious metals to include them in this category.
A lot of sophisticated investors shun these low-reward investments because theyâre looking for higher yields. But thatâs why so many lost everything in the dot-com bubble, the real estate meltdown, or investing with Bernie Madoff.
I used to brag that if I lost everything, I would be a millionaire again within a year. Then I proved it. Then I decided it might be simpler if I just didnât lose everything.
The next step is to put 25 percent of your portfolio in moderate-risk/moderate-reward investments. This is where Iâd classify things such as real estate and stocks.
And finally, you can put 25 percent of your portfolio into higher-risk/higher reward scenarios. This is when your cousin calls and tells you heâs invested in an oil well and getting 2,000 percent return a year. Check it out and if it looks real, take the risk. But just because it works out for six months, donât take everything out of the other two categories and dump it into that. Pigs get fat. Hogs get slaughtered.
Bottom Line
Governmentsâeven the well-meaning
Gold was almost $300 an ounce when I first started recommending that people buy itâand everyone thought I was crazy. Iâve never backed off, and even as it broke $500, $800, and $1,000 benchmarks, people kept deriding me. But Iâm creating my future, not competing on American Idol .
Donât Listen to the Advice of Most People, Because Most People are Broke
As a rule, commemorative gold and silver coins are not a good investment and donât justify the price they command. But you do want to have a small supply of them for an emergency. In case of a banking system meltdown, trading real gold or silver coins may be the only way to purchase fuel or food in a time of civil unrest. You can keep a small amount in your home safe and some extra in a nearby safe deposit box.
People still ask me if I think gold has peaked and will soon crash. All I know is Iâm not selling any. With the current state of government budgets and currencies, I see no reason that gold canât go to $15,000 an ounce one day. Iâm not saying it will, but I wonât be surprised if it does.
Something Else to Keep in Mind . . .
When they start mining asteroids in space, gold may plummet to $200 an ounce! Someone will take the risk of investing in mining in outer space (Planetary Resources, whose investors include James Cameron and the Google boys, are already in the game), and could develop technology that allows them to bring precious metals back to earth cheaper than it costs to mine them here. That will change the markets in precious metals instantly.
And the same thing will happen in real estate. That oceanfront property you own in Florida will only continue to appreciate, because theyâre not making any more oceanfront land. But when developers start selling ocean- floor property, the market will adjust! And when developers start selling timeshares on the moon, the market will adjust again! And rememberâweâre not talking next century. For some of this, weâre probably not even talking next decade. (Sir Richard Branson and his Virgin Galactic will be flying tourists into space starting in 2013.)
Taking Risks
What makes risky the new safe is taking calculated risks based on sound information and intelligent assumptions. Itâs doesnât mean that you take risks for the sake of risk. So as you prepare your portfolio, hereâs a simple guideline I use for allocating my own investments in terms of risk.
Put 50 percent of your portfolio in no-risk/low-reward investments. That means, theoretically, you canât lose your money; but of course, we know there are no absolutes in this case. The kind of investment Iâm talking about is a savings account or certificate of deposit that comes with a government-backed guarantee. I do feel secure enough with precious metals to include them in this category.
A lot of sophisticated investors shun these low-reward investments because theyâre looking for higher yields. But thatâs why so many lost everything in the dot-com bubble, the real estate meltdown, or investing with Bernie Madoff.
I used to brag that if I lost everything, I would be a millionaire again within a year. Then I proved it. Then I decided it might be simpler if I just didnât lose everything.
The next step is to put 25 percent of your portfolio in moderate-risk/moderate-reward investments. This is where Iâd classify things such as real estate and stocks.
And finally, you can put 25 percent of your portfolio into higher-risk/higher reward scenarios. This is when your cousin calls and tells you heâs invested in an oil well and getting 2,000 percent return a year. Check it out and if it looks real, take the risk. But just because it works out for six months, donât take everything out of the other two categories and dump it into that. Pigs get fat. Hogs get slaughtered.
Bottom Line
Governmentsâeven the well-meaning
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