Tuesday, January 14, 2014

Possible Future Exit for Gold Holders

If you are a gold holder and have an eye on the long term trends of the world, you feel confident in your monetary insurance and the potential for asset inflation in gold. I am. Copying the Chinese, Indians and Russians, I am in a monthly process of accumulating again to get my stocks back up to a set % of total assets. Question bouncing around is what to do if the price does jump significantly? How would one handle the taxes on that appreciation? What if they label me a kulak and come for my gold? Here is one suggestion. Buy income generating real estate with the gold.

The powers that be want an orderly, slow rise in gold. If forced to estimate, I would say $5000/ounce is that threshhold of tolerance for the elite before they'd set up the new system (whether internal or imposed by China-Russia). To borrow from the voice/exit idea, buying gold is voicing displeasure with the petrodollar system but simultaneously giving the holders a ticket for a possible exit. Scenarios of $10,000/ounce and higher are lower probability and would mean a world where you'd hold onto the gold because severe collapes would be upon us. Bullion banks are now positioned long, and the entire system did a great job of suppressing gold as gold has shifted from the west to the east. If the rise continues, eventually the late adopters will show up. You are still getting laughed at for holding gold. Your mom is still thinking of trading in her gold jewelry. When those shoeshine boy type markers flip, that is when you consider heading for the exits. How much of the rise in Bitcoin is due to people fleeing the dollar but feeling that gold is rigged right now? Still, what to do? Buy property that generates an income stream with your gold.

It sounds odd in our sea of stock propaganda, but land that produces some form of income is the greatest asset in America. It is the majority of wealth in the asset split charts for Americans. A great thing about a bubble in gold is that new buyers will overvalue gold and if suppression continues, deals of property for gold could become a reality. What is the benefit to you? Well you turn that gold into a real asset that suddenly is generating an income stream. Do not sleep on the idea of buying farmland acreage but leaving the sellers on the land as tenant farmers. More importantly, you do not have to pay taxes on your gold capital gains until you sell the property. Want to help out the seller and use the gold outside the official sale so they can sell the property for a lower price minimizing their taxes (if a gain). Taxes and death are certain, but delaying taxes is the next best thing to avoiding them. Ask Warren Buffet about the P&G-Gillette stock deal. This is not advice but just a note for gold holders to think about as things get odder.

*Not investment advice, just suggestion if you're like me and wondering what to do next


Anonymous said...

new Fed slate points towards Neo-Liberal shock therapy as the Fed's actual Exit plan. It turns out they do have one.

It will be Russia Redux as it's the same people, and not Chile or Poland [success].

It will be Oligarchal rapine.

What did well in RU 92-99? Is there anything short of buried bullion that will survive? I conclude not.

The only problem I have with your Real Estate income is we have a lawless and predatory state.

Real Estate can be seized. You could well find your tenants will live off you the landlord if your name is not Pritzker.

It already happened for instance in NYC.

Otherwise it's a good idea.


klejdys said...

1.) I assume you include little brother AG to big brother AU in your analysis? If SHTF, many will be unable to afford gold coins. Silver will be the coin of the people. Silver at $20 is a pretty good entry point and you can buy junk silver w/ very little markup by reputable companies like APMEX.

2.) Are you talking about holding physical gold? or close-enough proxies like CEF? (Or much worse - GLD.)

3.) If you have the courage to start buying PHYS AU now, if you really want to buy a few lottery tickets, start looking at the (junior) miners - talk about a beat down sector (GPXJ I believe). Review some of Christoper Barker's work at TheMotleyFool for some starting points.

4.) Remember CAT bought Bucyrus as a play on the long term efficacy of mineral mining operations. Lots of ways to skin the cat here.

Son of Brock Landers said...

@VXXC - Thanks for commenting, I enjoy your comments elsewhere. Think of farmland that produces so you are outside a city and out of the rental eminent domain potential racket. Yes the confiscations are coming but farmland should be safer or rentals in smaller cities or suburb areas.

@klejdys - Jr miners like Allied Nevada, hell yes. My thought on jr miners is if they get beaten down any farther the Chinese will just scarf them up to secure gold production. I am a physical guy. I like holding it. Sprott's funds are fine because he takes delivery and holds it for you. I do think silver will close the gap on the 55-1 ratio and come more in line with historical norms like 20-1 or even 16-1.