actually its not prices that have changed 150 years by and large...what
changed is a drop in the dollars value

MATTY wrote:

- quote -

Really? I'd suggest you look at the chart here;
http://www.kitco.com/scripts/hist_ch...rly_graphs.cgi

Gold was fixed from 1833 to 1930 at $20.65.
From 1938 to 1968 it was also flat in the mid $30's.
As the price was fixed, there was no 'protection' through the great
depression, or any other depression in the 1800's.

As far as the suit analogy is concerned, that's precisely the snake-oil
sales pitch used in the bubble of 1980 to convince the next guy to buy.
Did the suit price not change for 150 years?
When I studied commodities way back when, one thing I learned is that a
given set of mines typically has a reserve that changes based on the
price of the metals it contains. i.e. there may be areas that contain so
little gold that it would cost $500 to get it out of the ground. So
guess what? As the price crosses those thresholds, the supply actually
goes up quite a bit as the 'dead' mines can be re-opened.

JOE

actually gold has tracked inflation better than we all think.looking
back 200 years an ounce of gold bought a mans suit and a pair of
shoes..well here we are 200 years later and guess what an ounce of gold
buys ?
i think gold just got a bum rap.it had a flawed birth ..in the 70's
gold came off the gold standard of 35.00 an ounce by president nixons
decree and was released into an enviornement of hyper inflation...the
likes of which we never had in modern times in america and there wasnt
any other suitable means to bet against the markets or events growing
worse,, like the dot.coms these were levels gold should have never seen
...yes when compared to those blown out of proportion levels of the
70's it looks like it hasnt done much...at 3% inflation prices double
about every 20-23 years...well in 1986 gold was 350 an ounce ..well
folks here we are in 2006 at guess what? double............its just
gold is sneaky,it moves very slowly more ofton than not with little
fanfare,and no attention from other than gold bugs...but when you turn
around 20 years later there it is,right on track.

Ignoramus7121 wrote:

- quote -

I recall a conversation I had in 1987 as the market hit its peak, the
DOW at 2750. I wasn't clairvoyant, and wouldn't suggest here that I
recognized any top forming. What I said at the time was this;

"You're asking me if now is a good time to 'get into the market'. If
you're in cash now, I'd suggest that you enter the market over a 2 year
timeline, investing 10% per quarter until fully invested. If the market
continues to soar, you have a long time horizon and 1 year in or our
won't kill you. If it crashes, you'll average in at some midrange. On
the other hand, time forgives bad market timing. There will be a point
after every high which is higher that the last."

Now, if I can skip ahead to the double bottom where the Dow touched 8000
at the end of '02. Say my friend bought in at the top of 1987, and we
sat down again 15 years later.

2750> 8000 over 15 years is a return of 7.4%/yr, with dividends, closer
to 9%. To prove this point, I chose the 'worst' time to buy and the
'worst' time to sell.

Now to gold - when I see advertisements referring to gold as a 'store of
value' I'd like to puke. Any Ibottson chart (I love those charts) will
show that over time gold hardly kept up with inflation.

Your comparison to the dotcom bubble is appropriate, as there are those
who will make money in anything if they have the right timing. I think
that for every individual who made money in that bubble, there are
likely 10 or more who got their clocks cleaned.

For those who feel the end of the world is near, a stock of food,
weapons, and your religion's prayer books will serve you better than
gold. Can you imagine actually trading 1/10th ounce gold coins for food?

JOE

Ignoramus7121 <ignoramus7121[at]NOSPAM.7121.invalid> wrote:

- quote -

Diversification is the long term rational reason. But, to me, it sounds like
the original poster is chasing performance. A person who is comfortable with a
66% money market allocation has no business in commodities at this point.
-- Doug

I have not yet seen any rational reason to "invest in commodities",
broadly speaking, that was based on better reasoning than a suggestion
to invest in dotcom stocks in 2000. All arguments for it center around
saying, in more sophisticated terms that we should invest in them
"because their price keeps rising".

i

a small percentage in a commodities fund is well worth having
5-6%..commodity cycles historically run very long times,as much as
15-20 years at a time..since the 70's the slope of commodities has been
down..didnt matter at what point you bought in ,the trend was down
bottoming out in the 90's,,,following it from then on the line trends
higher and higher with oil up 500% ,gold up more than 200%,copper up
600% ,nickel aluminum and zinc all making new highs every year....the
point is we dont really know if this is the end of the trend or the
beginning of a longer trend...like anyother asset class you pay your
money and take your best shot....its another level of asset
diversification..let me tell you the best thing i ever did was buy
pcrdx and fsenx last year..we figure out even at 4 bucks a gallon the
profits we made as energy rose pays for our additional gas costs for
the next 3 years....if you cant beat em join em..

Aaron wrote:
- quote -

Maybe a little but you are way too much invested in money market.
Worry about that first. Take some of that money market and get it into
a good lost cost, no load bond fund and reinvest the dividends. Boost
the stock investment to at least 25% depending on your age. You need
to pick an asset allocation and stay with it and rebalance it once a
year. Personally, I'd stick with what has always worked. In 1999
everyone was critical of Buffet because he didn't invest in the dot
coms. Who's laughing today.

commodities is about 6% of my total mix....i divided that up between
pcrdx fidelity select energy services and gld gold fund.......gains
have been spectacular but im keeping a mental stop loss in my mind on
the funds and set a stop loss on gld about 4% below closing price

Aaron wrote:
- quote -

Some research finds that a long position in commodity futures can
improve the risk/reward characteristics of a portfolio with stocks and
bonds. I don't what the cost structures are of the fund two commodify
mutual funds you are considering -- they are probably much higher than
for stock and bond index funds and if so, they obviously become less
attractive. A 17% allocation to commodities does seem high to me,
especially relative to your other allocations.

Here is a recent paper on asset allocation and commodities.

http://papers.ssrn.com/sol3/papers.c...ract_id=560042
Facts and Fantasies about Commodity Futures
K. GEERT ROUWENHORST
Yale School of Management, International Center for Finance
GARY B. GORTON
University of Pennsylvania - Finance Department; National Bureau of
Economic Research (NBER)
February 28, 2005
Yale ICF Working Paper No. 04-20
Abstract:
We construct an equally-weighted index of commodity futures monthly
returns over the period between July of 1959 and December of 2004 in
order to study simple properties of commodity futures as an asset
class. Fully-collateralized commodity futures have historically offered
the same return and Sharpe ratio as equities. While the risk premium on
commodity futures is essentially the same as equities, commodity
futures returns are negatively correlated with equity returns and bond
returns. The negative correlation between commodity futures and the
other asset classes is due, in significant part, to different behavior
over the business cycle. In addition, commodity futures are positively
correlated with inflation, unexpected inflation, and changes in
expected inflation.
JEL Classifications: G2, G15, N2

I am 32 years old. This is not my retirement fund or it is not my
savings for a house or a car, I have that seperate. This is just a
backup/investment fund that I setup up to invest or in worst case have
to use if hard times happen to come up me and all my other money in
gone. I would never invest in individual commodities, but was thinking
about invest in some funds that invest in them. My thinking was if
commodities keeping going up then the economy will be hurting and
stocks will go down, but if I have commodities part of my portfolio I
will not be hurt as much. I am not trying to hit it big with
commodities, but to more diverisfy my portfolio.

I have money in money markets instead of bonds, because it seems like
money markets are making better than bonds right now. Is that true?

In article <1147057800.966143.131280[at]i39g2000cwa.googlegroups.com> ,
"Aaron" <aaronsuperguy[at]yahoo.com> wrote:

- quote -

Nearly everyone (except the former first lady) loses money in
commodities over the long haul. The mere fact that you have
to ask tells me that the answer is no, you don't know enough
to be investing in commodities.

-john-

--
================================================== ====================
John A. Weeks III 952-432-2708 john[at]johnweeks.com
Newave Communications http://www.johnweeks.com
================================================== ====================

"Aaron" <aaronsuperguy[at]yahoo.com> writes:

- quote -

Ah yes, commodity prices have gone through the roof lately, so
suddenly everybody wants to buy them. What's wrong with this picture?
Ever heard of "buy low, sell high"? In short, no, it's not a good
idea to drop a large chunk of your money into a random asset class
just because it's been in the news a lot lately.

You don't say how old you are, how long until you want to retire or
buy a house or whatever with your money. You might want to go do some
research about something called "asset allocation". Depending on where
you are relative to your goals, you might want to get some bond exposure
and/or increase your holdings in equities.

-Sandra the cynic

I currently have my after tax investments set up with:

66% in money markets
17% in US Stock (Mutual Funds)
17% in Foreign Stock (Mutual Funds)

I was thinking about moving around 17% of my money market fund into
commodity mutual funds such as PCRAX or QRAAX.

Is this a good idea? Which one fund would be better? Any other
suggestions?