Monday, December 15, 2008

When to Buy and When to Sell

The economy is going nuts right now. The stock market is extremely volatile. The precious metals market is defying all reason. Gas prices are in the gutter. Property values just keep getting lower. Firearm and ammo sales are through the roof which is resulting in higher and higher prices. Then again, prices have only been going up and they never seem to go back down in the firearms market. So what do you do if you want to preserve some of your wealth?

If you've got money in the stock market then you need to start thinking about getting out of it. It's down a LOT right now but this is not a buying opportunity. It'll probably go much lower. For the most part I got out of the stock market at the beginning of the year. What I have left won't start taking a serious hit until Obama gets into office and starts trying to bankrupt the energy industry so I might as well wait until the beginning of the year so that it gets applied to '10s taxes.

Gas is a pretty good thing to invest in. If you know that you're going to need gas then getting a few gas cans and keeping them full and rotated will pay off down the road when gas prices shoot up from $1.50 to $5.00 a gallon within a few months again. Hopefully that won't happen for at least another year but I'm not so sure that the establishment can keep prices artificially low for that long.

I've been writing this blog for over a year. Since I've started I've been promoting gold and silver as a good investment. For the last several months the "spot" price on gold and silver have been ridiculously low. I even made a post about it when I first noticed it tanking. Try buying gold or silver for the "spot" price. A lot of people are taking advantage of the spot price right now and then turning around and reselling for a good percentage over spot. One interesting entrepenureal endeavor that I've been hearing about lately are people who are holding "tupperware parties" where people bring their gold and the guy holding the party makes an offer on it. Obviously, the offer is well under market value but it's still high enough that the people with the old junk jewelry that's been tangled up in the bottom of their jewelry box for years feel like they're making out like bandits. On the other extreme the big hedge funds are selling gold futures by the ton because gold is the only thing that's still worth more than it was worth a few years ago. Now is an extremely good time to be in the precious metals market in one way or another. Even if they never shoot up exponentially (which is very very likely unless the powers that be manage to pull a really big, cute, fluffy rabbit out of their asses within the next year or so) it's still pretty easy to find people willing to sell at spot. Then it's just as easy to find people willing to pay you well above spot right now. The rule right now is if you've got it, save it. If you can find someone willing to sell it then buy it and either save it until the price goes back up or sell it for a profit.

Gas prices have been going down down down. The same economic games that are keeping the "official" price of gold down are keeping the price of gas down. Gas follows completely different rules than gold, though, so low gas prices in the market actually translate to low gas prices at the pump. When the "market price" goes back up then the price at the pump is going to go up right along with it. The price is going to go back up. Most of us can't store enough to make a big difference when it does go back up but you can offset some of the future price increases by buying a few gas cans now and keeping them full. How many gas cans can you fit into a corner of your shed or garage? How hard is it to not allow your gas gauge to go under 1/2 full?

Overinflated real estate prices are obviously what got us into this mess. I don't even want to go into all of the details of this horrible mistake by the powers that be. Suffice it to say that real estate prices are nowhere near as low as they should be. As more people lose their jobs, more people default on their mortgages and salaries start to drop the price of real estate will continue to follow suit. The price of real estate (like a lot of things with value) is all about perception, though. Even with prices as volatile as they are there are still some extremely profitable deals to be had. If you educate yourself and you're smart you can still make a ton of money in this business.

Firearms are another animal altogether. They follow their own rules. Obviously new laws and the fear of possible new laws being implemented have a lot of influence. Metals prices have something to do with it as well. We saw it a couple of years ago when prices on ammo doubled or even tripled in the space of a year or so. When Regan signed the law that banned the new manufacture of automatic firearms for the civilian market prices became absolutely ridiculous. When Clinton's AWB came to pass the prices on "preban" semi autos and high cap magazines went through the roof. When the AWB sunsetted the prices dropped again. Now, with Obama about to enter the oval office, prices are skyrocketing again because people are tripping over themselves to stock up. The prices still aren't ANYWHERE NEAR as high as they'll be if Obama actually does manage to get another ban passed so if you've got the extra cash and you feel like you need something then now is as good a time as any to get them. If you're buying in anticipation of a ban then stick to "evil black rifles", semi automatic handguns and high capacity magazines. Just don't stretch yourself trying to buy that stuff. It might be a while before you ever see a return on your "investment". Personally, I don't think that it'll be at the top of Obama's priorities after he gets into office so we'll have at least a year before we've got to worry about it. I see a buying opportunity within the next 6 months or so being much more likely if you're the one with cash in hand and the people that spent all of their extra cash in anticipation of a ban start to get desperate.

We're in for a wild ride. There is very little optimistic news out there in regards to the economy. It's going to get more and more turbulent. Keep in mind that while a lot of wealth is destroyed in times like these there are people picking up the pieces and profiting greatly. We're all going to go through some hard times. All that matters is how you come out of it. Create your own opportunities and you'll be fine.

4 comments:

theotherryan said...

There is so much going on in that post it makes my head spin. As for gold and silver I am purchasing as much as is practical and purportionate. As for investing I'm trying to build up some savings before putting anything except the 5% of my salary allocated for retirement into investments. Needing to get Wifey a new car this week took that down substantially. As for guns I'm probably not going to get another evil rifle. Trying to fill out my collection more then anything else. I have picked up a couple guns recently though. I find few people who think a Garand is a bad gun to own and far fewer who think a Remington 870 is a poor purchase.

As for land if you can afford it buy it. Houses are questionable but land isn't.

survivaltopics.com said...

In turbulent times there is vast opportunity as the status quo stands on its head. This is the perfect opportunity for those who can think outside the "norm".

Anonymous said...

A few local guys report there is now a six month wait on many 'evil black rifles', and I saw in the news recently that the BATF is now allowing store owners to photocopy the yellow sheets....demand has been so heavy that the BATF has run out of the originals to issue out.

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