Are treasuries a way of avoiding the bank collapse?

04/02/2013 | E. Pluribus Unum

[coloradan]

It would, but only if you somehow arranged to have more of them after they devalued, instead of the same number of them, worth less than when you first got them.

[coloradan]

Some geocached, although I might lose it, some at home, although I might be robbed, some in safety deposit boxes even though banks might facilitate its confiscation, and some abroad in services like GoldMoney and BullionVault, even though those jurisdictions might become subject to confiscation, wars or Acts of God. But bank deposits are unsecured loans to banks - for 0.05% interest. Do you feel that's a good risk-based return on investment? If they go bankrupt, bondholders will be paid before depositors, thanks to regulatory capture.

[Gadsden1st]

Seems like this question is like “Should I wear an automatic inflating life vest because I see this 100 ft. high tsunami headed this way?” I guess its like writing our Social Security numbers on our arms and legs with permanent marker.

America is so $Cr*w*d! America, when serious people have to consider such questions.

[ErnBatavia]

Ease back on the throttle....the first hint of funds confiscation would start the Revolution.

Ain't happening.

[E. Pluribus Unum]

America is so $Cr*w*d! America, when serious people have to consider such questions.

Somewhere, somehow, someway, retribution is going to be exacted from the responsible parties.

Too bad most of us won't live to see it.

[DCBryan1]

Bond yields as of 1117hrs EST:

1 MO=0.06%
3 MO=0.075%
6 MO=0.106%
1 YR=0.130%

2 YR=0.246%
3 YR=0.356%
5 YR=0.769%
10 YR=1.863%
30 YR=3.106%

As I broker whom does NOT know you or your suitability, I won't make recommendations for you specifically.

I am allocating my clients into select municipal bonds such as a 2 year bond I sold this AM. This is triple tax exempt for him since he lives in that area from city/county, state, and federal income taxes:

DEER CREEK CO MET DIST REF
Coupon= 2.000%
Maturity: 12/1/2016
Price=$103.215
Yield=1.100%
Tax equivalent yield (TEY) = 1.97%

+30bps over 2yr.

[E. Pluribus Unum]

Stockton, California is set to default on theirs, aren't they?

I am grateful for your honest input. It's just that there don't seem to be any good options.

[bgill]

BUT every time the Fed injects $85b into the system, your money is devalued.

And everytime they raise the min. wage, your money is devalued.

[Gadsden1st]

Sometimes, for just a moment, I think this Heaven / Hell is a farce dreamed up by the Devil. It gives us the “escape” that “Well, some time, the evil B@$tards will pay!” If there was no Hell, some may find the bill comming due a little early.

[DCBryan1]

There are 42,000+ issuers of tax free municipal bonds.

There are 2.5 million individual issues.

A couple of hundred are in default.

A few thousand are in distress.

So you have approximately 2.4 million issues to choose from.

That number does NOT include taxable federal agencies such as FNMA, FHLMC, FFCB, etc, nor does it include taxable corporates.

For instance, I am trying to sell 2mm OLIN (OLN) 5½ '22 @ $103¾ (5.00) BA1/BB- cusip 680665ah9

Olin's numbers look good:

Olin Corporation is a chemical manufacturer in three main business segments, Chlor Alkali Products (manufactures chlorine, caustic soda, hydrochloric acid, hydrogen, bleach products, and hydrogen peroxide) Chemical distribution (manufactures bleach products, and distributes caustic soda, bleach products, potassium hydroxide, and hydrochloric acid), and Winchester products (a maker of sporting ammunition, reloading components, small caliber military ammunition, and industrial cartridges).

For the fiscal period ended 12/31/2012 –
Sales - $2.187 billion Operating Income - $259 million (11.84%)

Net Income - $150 million (6.86%)
Adjusted EBITDA - $372.8 million (17.05%)
Adjusted Interest Coverage – 14x

For the period ended 12/31/2012 – Cash and cash equivalents - $165 million
Property, plant and equipment, net - $1.034 billion
Goodwill - $747 million
Total Debt - $714 million
Adjusted Total Debt Leverage – 1.9x
Market Capitalization - $2 billion

BOTTOM LINE UP FRONT (BLUF): Find a knowledgable and honest fixed income broker and don't let him sell you anything....make him TEACH you about fixed income products.

[E. Pluribus Unum]

Thanks. Will save for further study.

[DCBryan1]

Post 30 is not an offer to sell or buy securities....it is/was for illustration/informational purposes only. The bonds are out firm anyways.

[bgill]

You keep those precious metals on your wife's arm. Imelda kept her investments in her shoe closet. This way it's in your possession rather than on paper.

[E. Pluribus Unum]

Why am I hallucinating visions of il Duce?

[E. Pluribus Unum]

And everytime they raise the min. wage, your money is devalued.

And every time the Obamas go on vacation, your money is devalued.

[CharlesWayneCT]

I would buy Series-I savings bonds. Those you can hold directly, so no chance of losing money because of a brokerage problem.

And if the fed fixes things by driving up inflation, the I-series savings bonds technically will keep up.

If they devalue the currency, it won’t matter what you are in; you’d need to be in foreign stocks or foreign currency to make money in a devaluation.

[CharlesWayneCT]

If you truly believe the money has dropped in value by 30%, your advice should be to over-mortgage your house and get into as much low-income debt as possible, because you’d be paying back with money that was worth 30% less.

You use the money you get to buy real assets. You leverage them as well. If inflation hits, you are a winner, because in 5 years you are making twice as much per year, so your loans only cost half as much to repay.

If there is deflation, you are screwed, and should instead pay off everything now, rather than try to pay off later with money that is worth more.

[CharlesWayneCT]

Land is good unless you think the government is going to collapse, then you need specific land that you can use for growing food, or that has animals on it you can hunt, and then you need to be able to defend it.

So I would think land that is out in the middle of nowhere, maybe in mountainous regions with narrow passages. Technology can actually provide you with local sources of energy, and energy can give you a pump for water, and satellite connections for communication if that doesn’t fail.

Food is always good, if you can get non-perishable stuff. Also, clothing and other consumables. Think about everything you would need money for over the next 10 years, and then just buy all that stuff now and store it. You lose if there is inflation, because you could have bought it later for less, but if you have what you need, what does it matter?

Gold is useful only if there is still a society and people are still enraptured by the fiction that gold is useful. You can’t actually do anything with it, so unless someone else also hoarded, and is stupid enough to trade a useful item for a useless lump of metal, having gold won’t help.

On the other hand, if the problem is simple inflation, and the society is still intact, gold is helpful if you can convince others that the inflation will continue, and hope that they don’t ask why then you are selling it for cash.

[E. Pluribus Unum]

Thanks for the link.

The only thing that bothers me is that all you actually own is some bytes on a treasury department server.

There is no good place to hide when the feral government is rotten to its core.

[Vermont Lt]

You are correct about gold. If you are buying it to “trade” later, forget it.

Gold is a hedge against inflation and has been a universal store of value. An ounce is an ounce is an ounce. What someone will give you for it is what changes. And generally speaking, the value of an ounce of gold has never been small enough to be decent survival/SHTF currency.

You hold gold to make sure when civilization becomes sane again, you value has been maintained. Then you convert it to whatever is being used at that time..and move on from there.