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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory

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To: shades who wrote (83679)	7/17/2007 12:55:05 PM
From: russwinter	Read Replies (2) of 110194

<I am waiting for RUSS to HELOC his house and buy gold - only then am I gonna join the fight to kill the inflation monster -> Here's a little math for you, while treating your notion as a serious proposition. I basically got out of gold in early 2006 at about $570 (after owning it from $260). In a year and half since I've collected about 5% annually with T-bills (cash). Gold has gone up to $660 or 15%, out performing Bill's interest by about $45 or 7%. So I lost relative performance to gold, but no huge shakes especially considering my 100% plus prior gain. However if you had HELOCed your house as you say, you would have paid 9% annual cost, and your whole gain in gold would have been wiped out. Plus you risked a loss had gold gone down one iota. Further I don't have a house to HELOC, but if I did, I'd guess I would have lost another 8% of the collateral backing my HELOC. Does that really seem like a smart bet? Hardly, but think it describes a lot of transactions and bets that people are making and we haven't even had a correction, let alone a real bear market.

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