New Government I Bonds, good?greenspun.com : LUSENET : TimeBomb 2000 (Y2000) : One Thread
New savings bonds from the US Government called I Bonds went on sale Sept 1.
Regarding issues raised by Y2K, failing a complete government shutdown, these bonds would seem to be a reasonably safe place to put a portion of your savings in comparison to a bank or cash.
The main benefit is that they are indexed to inflation, so that the current interest rate is added to the inflation CPI rate to make a total return, currently 4.66%. In addition, if there is deflation as some have also suggested, this does not lower the return, you get the interest rate alone.
Certainly they have significant benefits over cash, although you cannot cash them in for the first 6 months, and they can be held in your possession and have a face value. They can also be replaced if lost or stolen, but cannot be traded for goods.
Does anyone have any opinions as to the value of these type of bonds for wealth preservation?
-- Brad Waddell (email@example.com), October 04, 1998
I would avoid any government bonds personally. Cash is king right now. Based on the current flow of events, which unfortunately seems to be running along the course of Mr. Yourdon's worst case scenario in his book, we will be looking at 1-5 years worth of disruption. A bond coupon will not buy you groceries or gasoline. You are actually better off, IMHO, to stash as much cash from your budget as possible between now and next April.
-- John Galt (firstname.lastname@example.org), October 04, 1998.
Yes John, but when you have the cash (30%) and gold (40%) holdings already, wouldn't it be good to diversify your portfolio into other safe instruments?
Yes these can't be traded, but they can be cashed at most any bank or direct with the fed. In what circumstance would the cash still be valuable if the government is not viable? If the government is still viable the bonds will be as well since they are backed in the same fashion, the only difference is safety and liquidity.
Is nobody accepting any possibility that the world might still limp along after 2000 and that all possible "investments" should not be shunned?
I'm looking at bonds for 10% of my portfolio, doesn't this sound like a reasonable number? The same percentage I use for gold call options and stock index futures puts (which have tripled in value in the laet 3 weeks). I don't agree that we should shun all types of investment assuming the worst.
-- Brad Waddell (email@example.com), October 04, 1998.
Dr. Ed Yardeni (we've all heard of him) recommends that half of one's personal portfolio be in short-term government bonds, at least at present. He was the #1 economic forecaster in the U.S. for 1997, according to the Wall Street Journal. And he still knows a thing or two.
Warren Buffett, the 3rd wealthiest man on the planet, has aggressively moved into bonds and silver. Likewise George Soros, another international billionaire investor, one of the world's 50 wealthiest men.
The bulk of Alan Greenspan's personal millions are in short-term Treasuries.
These guys aren't dummies, by any stretch! And look at what they're doing.
-- John Howard (Greenville, NC) (firstname.lastname@example.org), October 04, 1998.
Yes it appears bonds may of been a safe bet...but their is a new kid coming on the block and when he arrives he will devestate the dollar as we know it today. Cash-bonds-stocks will all be worth a lot less then thay are today....only GOLD will survive. This new kid's name is called the "euro". It will be beacked with 15% GOLD , while the dollar is backed by nothing... no, Im sorry, its backed by HUGE DEBT.
What do you think the world will use a reserves, US dollars, gold or Euro's backed with GOLD?
why do you think Japan is already geeting rid of some of the Treasuries?
Watch out everyone...before Y2K arrives, the EURO will come!
-- Rob Laden (DALLASGUNNS@prodigy.net), October 10, 1998.
None for me, thank you. Those are the people who have gotten us into this financial nightmare and I don't intend to encourage them. This might be a good time to diversify out of the dollar some, at least for the short run, considering the pasting it's taken lately and the likelihood that will continue due to probable continued interest rate cuts. Martin Weiss (Safe Money Reports) recommends putting 10% of your conservative investments into British pound- denominated CDs, available through Mark Twain/ Mercantile Bank (St. Louis). They have instruments denominated in several other currencies- Swiss francs as well, if you want a 'harder' currency, pending the Euro's heralded debut in January 1999. These instruments are available for terms as short as three months, are FDIC insured (rah!) and convert back to dollars or any of several other currencies easily. You too can be like George Soros, and punish the folly of governments... if you choose the right currency. Keep in mind that all save the SFr are unbacked by anything save promises approximately as reliable as Bill Clinton's veracity.
It seems increasingly possible that we've seen the bottom in gold prices, though some additional sales may come about from central banks and the IMF if (when?) pressures continue to mount. The current maximum downside on gold as far as I can tell is about 30%, while the upside seems pretty much unlimited (that's positing minimum prices at about $200/oz if there are large sales). Last week the IMF threatened sales and the price still went up. Go figure. At any rate I am still buying when I can, in any form I can (physical, mining stock, options and futures). I have begun to exceed most advisors' recommended maximums (5-15% of total investments) in gold at this point. Gold price is an indicator of lack of trust- in currency or stocks or markets or circumstances or governments- and I think there's a LOT of that mistrust about to materialize. When it does it's likely to move a WHOLE lot of money into a very narrow market. Guess what will happen to the price then?? My best guess here, you pays your money and you takes your choice. But I'm moving some of my sainted mom's money that way too, so I better be right or I'll never hear the end of it.
-- nemo (email@example.com), October 10, 1998.
This cant be serious...I would NOT trust a paper with a prmise to pay after this past week. That would be like asking the president if he had an affair with monica
-- cynicbynature (firstname.lastname@example.org), October 10, 1998.
Invest in banks and governments????
-- Donna Barthuley (email@example.com), October 10, 1998.
Trust No Ones paper !!! (except the T.P.)
Nemo: I presume that you are wise enough to hold short of the 25% line with your shiny stuff, and I do hope that you use some of your loot to buy beenie weenies for the tribe first. If you have any excess money around why not diversify somewhat and buy some common old fashion barter type items; coffee,candy, etc. the things someone else will want to swap for what you need. I just bet you that you will overlook something in your own preps and will need a guy like me to swap something that I forgot for what you need. I too play with the shiny. I like it and have done so for some time. But even I don't keep all of a stash in it. Don't let ole Midas cloud you up.
-- sweetolebob(La) (firstname.lastname@example.org), October 10, 1998.
Gee, nice to know all you folks have completely abandoned credit cards, checks, and currency and have moved over to the barter system, are swapping labor or are spending only gold or silver already. You're a year and a half ahead of the rest of us, and will have an unfair advantage when the crash comes.
Seriouisly, if you are now walking around with green cash in your pocket, or if you still have a bank account or 401k, or if you have ANY value represented by paper, you're investing in/trusting SOMETHING- government or banks or whatever. You have to make decisions on what the best thing to do is at any given time considering the circumstances. I INVEST in investments, I don't MARRY them, and I will get rid of various approaches as it seems wise or adequately profitable to do so. Right now all I'm trying to do is stay one step ahead of the pack. And I trust government- any government at any level- about as far as I could throw my house. But the game hasn't changed YET, folks. You gotta play it as it lies.
I appreciate well intended concern or valid criticism (yes, I have plenty of groceries and goodies, other useful skills, acres and acres in the boonies in an established community, multiple water sources etc.- thank you). I am happy to provide a source of amusement, if that's the best I can manage for the vastly superior large-brained life forms out there who stoop to reading this list. If the opinions or advice I offer are useful, use them for what they're worth. If you have better, offer them.
-- nemo (email@example.com), October 11, 1998.