i know this has been discussed before, but i haven't quite got a conclusive answer to a safe place to put my investment money for the next year or so. i'm out of the stock market and have it in my banks money market(which i don't want to leave in a banks money market considering the unknown impact y2k will have on banks). i was thinking maybe short-term(3 months) treasury notes( or treasury bills, what is the difference?) also short-term gov't bonds. but are either one of these truly safe also, if the gov't takes a big hit? as you can tell, i'm not real investment savvy( we had our investments managed). any help you could give(plain and simple language please) would be appreciated. also can i buy these direct from the gov't and if so, how? or thru a broker. thanks, dory

-- dory (crtwheel@eburg.com), July 07, 1999

Answers

From least safe to safest:

tech stock

blue chip stock

Money market

T-bill/savings acccount

cash, in a floor safe

gold, buried

-- (@ .), July 07, 1999.

Dory, I'm not being a smart ass here. I really mean what I'm about to say.

The safest place for your money is in cash or precious metals, in your physical possession.

Buy a good commercial quality safe. Install it in a secret place. Put your money there. What do you have to lose? A few measly percentage points of interest over the next six months? Why expose your money to the risk and huge uncertainty of Y2K?

I suggest that you read It Couldn't Happen Here. Very eye opening.

-- Lawrence (not@this.time), July 07, 1999.

also -- this is a fairly large chunk of money( much more than $50,000.00)i only mention this because i don't think i'd want to bury this much cash! maybe some, but not all of it!thanks- dory

-- dory (crtwheel@eburg.com), July 07, 1999.

Dory-

Please keep in mind that of all the paper assets in the country (T-Bills, CD's, stocks, bonds, etc. there's only about 1 per cent or so of cash that is available for redemption. It's about enough for $400-500 PER FAMILY and will go fast when the bank runs begin. I suggest some diversity: cash, some gold and junk silver, items that could be used for barter,etc. If a banker or broker says there will be plenty of cash available they are a liar or uninformed, in which case do not follow their instructions.

-- (gfc40@hotmail.net), July 07, 1999.

Dory, if you actually believe in TEOTWAWKI, then follow the advice given. If you believe in a correction caused by a panic, I would suggest T-bills or money market. Gold and precious metals are far too risky. The Doomers on this forum have been saying "Buy Gold" for months. Where has gold gone? Into the toilet. Best of all, get some proffesional advice. What you receive here for free may be what it is worth...

-- Y2K Pro (2@641.com), July 07, 1999.

I have a friend who says he buried cash years ago and the mold ruined it. No joke.

-- KoFE (your@town.USA), July 07, 1999.

Dory, if you actually believe in TEOTWAWKI, then follow the advice given. If you believe in a correction caused by a panic, I would suggest T-bills or money market. Gold and precious metals are far too risky. The Doomers on this forum have been saying "Buy Gold" for months. Where has gold gone? Into the toilet. Best of all, get some proffesional advice. What you receive here for free may be what it is worth...

-- Y2K Pro (2@641.com), July 07, 1999.

Well said Pro,

Oh, but hey buddy, does that include the advise you just gave? And Pro, dont use the term FOR free, its like that term I couldNT care less. Sorry, this just a pet peeve of mine.

-- Mike (midwestmike_@hotmail.com), July 07, 1999.

That's the thing to do. Everyone take all your money out of the bank, and I almost guarantee you that it won't be worth zip.

-- gilda (jess@listbot.com), July 07, 1999.

Dory,

Y2K Pro is partially correct. The price of gold has gone down in recent months, but I would hardly qualify that as "the toilet." Instead, it represents a great buying opportunity.

As far as precious metals being "too risky," as Y2K Pro asserts, nothing could be further from the truth. T Bills and other government bonds are nothing but securitized debt, dependent on the Feds being able to collect taxes to pay the interest in 2000, and inherently worthless. They are promises to pay. Are you willing to bet your life savings on the government remaining solvent in 2000?

The objective in holding gold is to protect your capital, not to make a killing in speculation. Click through to the link I provided above. Gold is "too risky?" Hardly. It physically endures. It will be there in your safe when you want it. Government debt is what's risky. With the sweep of a pen, the President or the Secretary of the Treasury can make your T Bills worthless.

As far as the amount of your money, well, $50,000 or $100,000 is really not very much money. I'm not trying to demean your feat of savings, nor the labor you traded in gaining it. I'm just saying, don't let the amount paralyze you. Make the right decision and promptly act on it. You would be surprised at just how small a space $50k in gold takes up. You could hide it in a woman's purse. Many of my acquaintances have hundreds of thousands, if not millions, stored this way. It's where the smart money is.

-- Lawrence (not@this.time), July 07, 1999.

KoFE,

Gold will not moulder.

Gilda,

Your point is well taken. You have illustrated the inherent worthlessness of paper money. It is based on confidence -- it is a confidence game. Would you fault someone for wising up and fleeing a Ponzi scheme before it folds? Of course not. Then why do you imply that others should refrain from saving themselves so that the charade may continue?

-- Lawrence (not@this.time), July 07, 1999.

Lawrence, didja ever try to carry a purse with a little over twelve pounds of gold in it? It's actually too heavy unless you really have a very heavy-duty purse.....I guess you could actually carry it around with you, but it might be heavy to carry very long....

-- (nobody@nowhere.com), July 07, 1999.

OK, you take all your money out of the bank, so does everyone else and it's worthless paper. (I still have some confederate money, BTW.) So to be safe, you buy gold. Good idea; it's cheap and compact. But a road warrior, looter, or your son-in-law, etc., burns your house and takes your gold. Uh oh! Just a thought. Hell, who knows what's best.

-- gilda (jess@listbot.com), July 07, 1999.

If the price of T-bone steaks went "into the toilet", how many would refuse to fill their freezers?

-- A. Hambley (a.hambley@usa.net), July 07, 1999.

I'm surprised to find myself agreeing with Y2K Pro on anything, but I agree with his advice above.

-- Peter Errington (petere@ricochet.net), July 07, 1999.

If I had $50,000, I might take a few thousand in cash and maybe $10,000 in precious metals (I like both silver and gold).

I think I would put the rest in a trading account, like e-trade.

You can park your money in a treasury account.

You can write checks from it.

You can quickly invest it once the stock market really hits bottom.

Best of all, there is no fractional reserve. Every penny in my account and every penny of every other customer can come out (theoretically) without collapsing the banking system.

How does this stack up as a good y2k plan? I await the usual intense feedback.

-- just wondering (tom@home.com), July 07, 1999.

Y2K Pro: do every one a favor and never comment on gold again.Thanks.

-- potent (potent308@hotmail.com), July 07, 1999.

Dory,

This is a very good question. Unfortunately a lot of people have decided that the only answer is a bunch of gold coins. I don't think this is all of it.'

My Answer: There is no place that is truly safe in this environment. Will .gov survive? Will banks survive? Will we survive? Without being attacked, without people trying to steal from us? Perhaps what you'd like to do is to minimize your overall risk?

First, don't park the money in one investment. If we go teotwawki, gold and silver will be nice. Buy some. Understand this, however: both gold and silver are in bear markets right now. They will probably go a lot lower before they go higher. {I can't believe it -- this is the first time I've agreed with y2kpro} The money you put into these forms of savings should be money that you can afford to lose -- but money that may save your life. Their value is that -- although they may decline in value (compared to today's dollar) -- they will retain some value. But, in the event that we end up with hyperinflation (which can't be ruled out) or total chaos you'll love them

Second, hold cash. For short term disruptions, cash may be king.

Third, Treasury instruments with about a 5-10 year duration (medium term, T-notes). If we enter a depression you can expect to see interest rates go down. This means that the price paid for interest bearing paper will go up. This may be the most likely scenario.

Fourth, hold 90 day Treasuries. These won't bring you much of a return (a little interest) but may be the safest place to park money. If the entire banking system folds you may have trouble cashing them in, but if you're holding enough cash to survive you can just roll them over and wait.

How much? How bad do you thin things will be? TEOTWAWKI? -- try a batch of gold/silver coins. Depression -- go heavier on the medium term bonds. But hold cash for immediate use and put some money in 90 day bills.

-- De (delewisX@inetone.net), July 07, 1999.

Who forgot to clean up around here? :-)

-- Gayla (privacy@please.com), July 07, 1999.

Here goes Y2PEE Pro again with his stupid posts. He says gold has gone down the toilet. Off course it has and thewre is a reason for it!!! He must believe in buying high and selling low! That is very typical of a government beaurocrat!

Y2PEE Pro, let me let you in on something. The whole financial market is controlled and manipulated by the big boys (Billionairs!). Right now they are driving the Dow up to the stratosphere so they can bail out this fall at a huge profit.

Then when they bail out, by that time they will have driven gold at rock bottom, so they can preserve and increase their wealth as gold will go sky high in 2000!!!

I guess this is too simple for you to figure out!!!

-- Y2K ready (Y2Kready@aol.com), July 08, 1999.

Dory:

I see there's the usual conjecture about what one SHOULD do with their money, and no one actually addressing your actual questions. I agree with Y2kpro that one shouldn't get financial advice from the internet. There is someone, however, on the MSNBC Wall Street Board who could likely explain the differences in short-term, long term, treasury bills, treasury notes, etc. He uses the handle Dixie. He's an older fellow and I've asked him to review articles that confused me on occasion. He's been around the block a few times investment- wise, even buying gold coins at the recommendation of Howard Ruff in the late 70's. Dixie still has those coins. You can feel free to tell him that Anita suggested that he could help with your questions. You needn't mention Y2k, as it may set off some other posters on that forum, but if you mention my name, he'll know you're looking into Y2k options.

You can find Dixie at MSNBC Wall Street Board

You can find a little history of Howard Ruff at Howard Ruff report

Opinions on this forum vary immensely on what folks should do with their money, as I learned when I engaged in Why I intend to boycott Bank Runs

Good luck in whatever you decide.

-- Anita (spoonera@msn.com), July 08, 1999.

Amazing no-one has mentioned index-linked bonds.

Of course, they go the same way as other paper if it's an apocalyptic TEOTWAWKI. However, if you assume that the government will survive and not default, these have a very obvious advantage over other forms of paper: they'll survive inflation. In contrast, conventional bonds could have their purchasing power drastically reduced if the government had to resort to printing money ("monetizing debt") in order to meet its obligations and/or reflate the economy

UK folks only: UK national savings index-linked savings certificates have a further advantage: should deflation not inflation happen, they don't go down in price, whereas ordinary index-linked gilts (bonds) would.

-- Nigel Arnot (nra@maxwell.ph.kcl.ac.uk), July 08, 1999.

One thing you need to know about (all US) treasuries or bonds (gov) is that at their discretion the government can convert any outstanding T-Bills or Bonds into 30 year Bonds without recourse to liquidation until the end of thirty years (this would also lock in the interest rate).

Essentially this would make them worthless as it would be like putting your money in prison, a virtual confiscation. In a really bad situation (Y2K inspired economic and financial panic comes to mind) they can move to freeze everyone in place. This would completely freak out the world financial markets and destroy our credibility though.

Couple this with severe restrictions on bank account activity (which the banks would love since it would take the heat off of them) and a virtual halt on cash withdrawls would be what I think amounts to a 'I don't want my money anywhere near THAT situation' kind of thing.

You could do an allocation like this:

5% gold bullion coins like Canadian Maple Leafs 5% US pre 1933 gold coins of numismatic quality (graded and sealed) 5% silver bullion coins like Silver Eagles 5% junk silver coins, preferably dimes 15% cash in $100 and $50 denominations 4% cash in $1, $5 and $10 denominations 1% cash in coin 20% 3 month T-bills 20% prefered stock Texas oil and gas producer majors 20% in *garranteed cash deposit* in small savings and loan you absolutely know is compliant

*garranteed cash deposit* I know a local S&L which is pretty much done with remediation. I am thinking of approaching them to set up an account which is backed by cash in their vault, payable on demand (reserved) and will pay a small fee for the availability of same to me. Don't know what the options are here but will report back on this.

-- ..- (dit@dot.dash), July 08, 1999.

Here's my two bit opinion on y2k-wealth preservation.

First, diversify. Nothing original about that idea, it's what any pro invstment advisor will tell you to do. However, what they invariably mean by "diversify" is to hold approximately 100% of your wealth in paper/electronic promises to pay. What I mean by "diversify" is to ensure that you have a portion allocated towards each different kind of investment. And I mean DIFFERENT. i.e., you can cover yourself to come out ahead, (or at least relatively "ahead") if you have an investment strategy for any realistic y2k scenario, i.e. ranging from "Oh my Lordy by act of God we somehow escaped with just a killer recession", all the way up to "Capitaclysm with the lot, every organism for himself, much wailing and gnashing of teeth, woe, woe, woe...". Here's how to do it...

* Have 30% of wealth in precious metals in your possession. Gold seems to be the most popular, for strong historical reasons, plus because it is more easily hidden and transported than silver. Silver is bulkier, but apparently it is cheaper now even than gold is, going by the historical relative-perceived-value-ratio that the prices of these two metals have usually maintained. If you've got yourself a secure base where you can ride out the worst of y2k then I would lean more towards silver, without ignoring gold. If you're stuck in a city like me, then go for the gold.

Platinum is a bit more of an unknown quantity to me, basically because it hasn't been discussed much here at Yourdonfor's. It's price per ounce is higher than gold's, therefore I guess it has the same advantage over gold that gold has over silver, i.e. your stored wealth weighs less, takes up less room, is less conspicuous. A downside to platinum is its probable dimished utility in a mega-teotwawki scenario; I figure that a gold dubloon will find more acceptance as currency in a post-apocalyptic future than would a small ingot of platinum. An upside of platinum is that it has much more intrinsic? wealth than gold because it's current high valuation is due more to it's industrial applications than merely to convention, precedent and sentiment, which account for most of gold's valuation. (Platinum - 60% industrial utility, 40% rarity, sentiment; gold - 10% industrial utility, 90% history, sentiment.) But then again, there might not be a whole lot of that sort of industry going on, right? So platinum is not the metal to buy for mega-teotwawki.

But it might be a nice one to get into for a severe recession - through - to - severe depression, because it is mostly mined in South Africa, which is currently a chaotic shambollic place, and which will surely be much worse post '00. (Oh, the rest of the platinum comes from Russia!) I've never before heard of anyone actually owning and possessing platinum as a survivalist measure, maybe there are good reasons for this?, or maybe not. To summarize this metals section, go something like 20% gold, 15% silver, and maybe 5% platinum if you're feeling adventurous. (And diversify the hiding places too perhaps? Some in the wilderness, most in your safe, some at your friend's house??, some in a safety deposit box?????. Just hedge, hedge, hedge.) mithril?

* Have 25% of your wealth in cash (in hand, not in electronic form.) It's obviously less risky, more conservative (although not more conventional) to have it in your own possesion than to risk seeing it evaporate in a total meltdown. (unless you believe that Greenspan BS about robbers.) Not only is it good for getting you over emergencies, cash can also be viewed as a positive, for-growth investment given the strange times that are fast approaching. In Gary North's quite excellent "Open letter to Alan Greenspan", he explains how the purchasing power of cash would multiply eightfold in a scenario where electronic money has lost its magic power. If North is correct about this, then 25% in cash would leave you relatively wealthier than you are today, although the concomitant small-a apocalyptic landscape would dampen your spending spree enthusiasm a little. Small notes if you can.

* Have 5% of your wealth in "stuff". By this I mean stuff that is relatively cheap now, but will rise in value during a depression-plus. Stuff such as non-hybrid seeds, bullets, cigarettes, alkyhol, crack??, bic lighters, stored food. I'm guessing you don't own a warehouse so go for compact items. You can barter this stuff, or sell it at markets.

Having lots of stuff might make you conspicuous and bring danger, so that's certainly a downside. Seeds are a great one for multiplying value...you could buy 5kg bags of seed, divide the seed up into small portions, sell those portions at much less than the post-disaster going rate and still multiply your money considerably. Consider such stuff as an investment, not as part of your own preps.

*Put 20% in short positions on the futures market. Now this money could well evaporate into thin air if TS really HTF, but if things are that dire then you'll already be a relatively rich person due to the vastly inflated value of the cash and metals you're holding. But, in any situation from a mild downturn to a-killer-depression-but-the-system-survives, such futures investments will necessarily increase in value. The more the markets fall, the more they pay off. If the markets shed 90% of their value ala 1929-33, then an investment of 20% of your capital in short positions will more than cover the initial 100% you started with. You will have preserved your wealth. Now you may well not be able to access it for quite some time, but it will still be there on someone's books, and as the system pulls itself back together or mutates, you would in all probability see your electronic promise to pay being honoured. Unless maybe the government comes out with some kind of newfangled anti-carpetbagger law, which sees all short positions null and voided. And, or unless the honouring of these gambles is contigent upon the continued viability of particular market players??, perhaps those who you contracted with, I guess. Futures trading is esoteric and there's a great deal about it I don't know. Freddie the freeloader's threads in the banking/finance? section of the archives are a good place to start for more info, but I'd want even more info than is there before putting my money on the table. It's a good idea though, this selling short business. Maybe less than 20% in futures is sufficient to cover the 100% you wish to preserve, I'm not sure.

* Put 10% into extra teotwawki preparations!! Be thankful that unlike some of us, you have any money to worry about at all!

* Give 10% to other people, you greedy bastard! Spend that money on preps for other people, and you'll do very well on the big scoreboard in the sky.

There'ya, I've saved your moola and your soul. Unless..unlessss... there's bound to be something I haven't thought through?... do tell.

-- number six (Iam_not_a_number@hotmail.com), July 08, 1999.

number six,

Let me congratulate your: First, diversify.

On the other hand, while I think that cash may appreciate, I do not expect gold to do so.

But my primary reason for replying to your post is a concern about the "20% in short positions on the futures market". Futures trading is very risky, even for pros. Not only is guessing market direction crucial, but timing is also. Furthermore, trading in futures contracts can lose more than your initial investment, much more.

I have noticed Freddie's enthusiasm for, and confidence in, certain kinds of investments. Both the enthusiasm and the confidence can be hazardous when making investment decisions.

In another thread Freddie brought up LEAPS put options. These are safer than futures in that you are not on the hook for more than your intitial investment. There are various kinds of them, and some may be good investments now and some may be even better later this year. I happen to think that is the case, although unlike Freddie, I prefer index options to stock options. In any case, such investments need to be thought through carefully.

Jerry

-- Jerry B (skeptic76@erols.com), July 08, 1999.

Platinum is a precious industrial metal. It would not be a good bet for a post-apocalyptic coinage.

Why? Well, ask yourself how many gold-coloured metals there are. How many that won't tarnish? How many that heavy? How many so soft and malleable?

Fact is, none. Gold can be recognised for itself without any technology. It's perfect for coinage. It's also easy to work into beautiful jewellery.

Now ask the same about silvery metals. 80% Tungsten-silver looks a lot like platinum, and is almost as dense. I'm sure there are better candidates for fake platinum that I don't know about. Also, platinum is hard to work; near-impossible without modern technology.

What it is is an extremely potent chemical catalyst. This is where most platinum goes; into petrochemical plants, into car exhaust catalysts, and this platinum gets used up. Jewellery is less significant.

So, wealth saved as platinum is a vote against TEOTWAWKI. Place your bets...

-- Nigel Arnot (nra@maxwell.ph.kcl.ac.uk), July 09, 1999.