Category: Economics & Investing

Just a heads-up, lots of folks in place like California where non-recourse loans are mandated by law (at least for homes) feel pretty smug, thinking that even if they get upside down on a mortgage they can walk away without repercussions. Bad news: the IRS considers the amount of the loan “forgiven” by the bank to be income. That means, to use California numbers, if you owe $500,000 on a house which sells at foreclosure for $200,000, you now owe income taxes on your $300,000 in income you just “received”. Just a quick “report from the ground”, I live in …

James, Great site. Keep up the great work. Here are two interesting links about the market dominance of ethanol in Brazil: CBS News and Washington Post. Brazil plans to be energy independent by next year, based on conversion of sugar cane to ethanol. In comparison, the ethanol extracted from corn yields only about 15 to 25 percent more fuel than the fossil fuels that were used to produce it. In Brazil, according to industry studies, the sugar-based ethanol yields about 830 percent more. Sugar cane may not the answer here in the US, but it does show what can happen …

Dear Jim: I am in the process of converting my U.S. Dollar-based Individual Retirement Account (IRA) into a precious metals IRA. 1.) Do you recommend it to be based in silver? Silver bars or Eagles? 2.) Or do you recommend (based on current prices,etc.) it to be in gold? Gold bullion or Eagles? 3.) Or do suggest a combination of both metals? If so what percentages and what types? Thanks again for you considered opinions. B’Shem Yahshua HaMoshiach Sar Shalom (In the Name of Yahshua the Messiah Prince of Peace) – Dr. Sidney Zweibel JWR Replies: If the storage fee …

James: Just a hint to my SurvivalBlog friends, if I had cash in the USA, then I would start buying gold now, and continuing to dollar cost average into the market since it may still go lower than Au @ $600 and Ag @ $11.02. Both are good investments for long term hedge/wealth preservation. Proviso for the record: I would never make a suggestion or advise in financial matters since that carries personal legal risk. I suspect that we are witnessing the final metals manipulation before Euro conversion of some oil trading and inflation driven dollar devaluation. Do some web …

Dear Jim: I respectfully disagree that the housing “bubble has popped”. (You had written in Odds ‘n Sods: “Here in the U.S., the unsold house inventory backlog jumped to 565,000 in April. The housing bubble has popped. There are no more bidding wars for houses. Now its price cut after price cut. In the coastal markets, I anticipate a race to the bottom, most likely starting in September of Aught Six.”) Thankfully the air has been coming out very steadily of this overextended price balloon, without the blow-up or popping that could have occurred. As a Wall Street Journal article …

  Dear Jim, Regarding the metal content of gold bullion tokens: Gold Eagles are 22 karat, as are Krugerrands–the respondent in the old mail you quoted had that point wrong, too. (Where he claimed Eagles were less accepted than “pure gold” kruggerands (sic).) British Sovereigns are also 22 karat, with four coins equaling not quite one ounce of gold. Canadian Gold Maple Leafs, PAMP and Credit Suisse bars, and hallmarked bars and coins with .999 or .9999 are as close to pure as one can find. However, since it’s the gold content that is being traded, and that content is …

Mr. Rawles: The other day you mentioned some pretty outlandish predictions for gold and silver from the “gold bugs.” Just what are they saying, and how credible are their claims? I’d also like to hear your own estimation of gold’s potential. Thank You, – Mrs. F. JWR Replies: Some of the claims are indeed outlandish — like Roland Watson, who predicted $10,000 per ounce gold. (See below.) But it isn’t just die-hard gold bugs that are predicting significantly higher precious metals prices by the end of this decade. There are quite a few Wall Street wonks that are talking about …

You may have read in recent years that both Microsoft’s president Bill Gates and Berkshire Hathaway (founded and still led by Warren Buffet) acquired large hoards of physical silver when silver prices neared their low ebb in the late 1990s first few years of this decade. Bill Gates purchased at least $10 million worth, with his “personal investment money.” Meanwhile, Berkshire Hathaway bought 129.7 million ounces. According to published accounts, the latter bought their silver at $4.40 per ounce, in 1997. The recent news on Wall Street is that Berkshire Hathaway has quietly sold off their silver position in the …