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You’ve Been Warned: My Uncle Just Bought Gold…

One of the reasons I’m in the “money business” is because my family never had any — actually, that’s not true. My family used to have money, and lots of land.

Actually we were the All-American story. My great, great, great, (maybe a couple of more “greats” in there too) grandfather sold himself into indentured servitude by way of Scotland to come to America. Sometime in the 1760’s, I think. My dad could tell you all of the exact details, William Wallace — the whole thing. I digress…

For seven years we farmed & fixed stuff for rich guys & then bootstrapped ourselves into local politics, law school, medical school, and eventually the family fortune was tied up in oil fields in Texas. These oil fields kept the family comfortable for a couple of generations and then supposedly one of my not-so-great grandfathers & his brother started feuding over the money. They fought so vehemently that when the dust settled, all that was left were attorney bills — or so goes the story.

Since then, my dad’s side of the family has sort of been cursed when it comes to money — basically with any decision that can be made about money. I won’t bore you with all the gory details, but trust me, Hugo from Lost would run a close second to most of the members of my family when it comes to the tragedy of money.

And so, from a very early age I learned a few things. 1) most misfortune that’s centered around money is usually the result of poor planning, or greed. I know this because my family spent most of the 80’s buying extended warranties without ever doing the math. I also witnessed the salesman gladly selling the useless joke. 2) Since “the incident” the Bell family karma has been to pretty much be: too early, too late, too conservative, too aggressive, or too naive about all things money. And, they’re all still pretty greedy & selfish.

Growing up with Scottish pride, I learned about all the world-changing discoveries & inventions from Scots. But the more I’ve learned about my family, the more I’m thinking maybe we came from a different part of the island; The “rock-hurling-skirt-wearing-midgets-who-are-hairy-in-all-the-wrong-places–living-among-drunks-and-people-with-bad-teeth” side of the island.

Fortunately, it’s not all the family I’ve got.

As fate would have it, my uncle called me a couple of days ago, telling me that he heard something about March 21, 2012 — Something about the Federal Reserve “devaluing the US dollar 40% (on that day) along with the rest of the world’s currencies…” All on THAT day. And — he wants to put ALL of his portfolio into Gold, like right now.

I’m not sure what radio/internet news/commentary/stock-newsletter/insider god was sharing this date, but my uncle believes. I know there are some other believers too, I’ve seen the comments trolling on Business Insider.

There was no amount of ‘talking off the ledge’ on this one; I suggested maybe, just maybe, this was not such a great idea. He knew it was a gamble, but he liked his odds. He doesn’t trust Washington or the system. And who can blame him? Then something about the “coming gold standard…”

I said, “…It’s possible I suppose. But at that point, if that happens… I’m personally thinking we’re a bit more Mad Max, aren’t you?”

Here’s the deal — my uncle served our country in the Vietnam war (actually according to my dad, my family has fought in every single US war — except Iraq 2 and Afghanistan). My family & my uncle deserve my/our gratitude & respect. But they are also absolutely, certifiably, batshit crazy at times.

It’s okay, they know.

Fortunately he has a great pension, so even when he does “bet the farm” like this, he’ll be fine. He does still have the self-preservation part of his lizard brain, so he’ll sell if/when he needs to — I’m guess once things drop by about 50% this time around.

Although he rarely “trades”, he does make these “bet the farm” moves about once a year. And when he does, I’ve learned to note what he says because he’s usually in the ballpark of something, he just doesn’t know whether he’s coming or going. Personally, I usually do the opposite — more so with my dad’s moves.

Here’s examples of the last two “bet the farm” calls from these 3 years.

Too Aggressive:

My Uncle bought Corning in 2005, I think. –I’d have to look a bit deeper. He was in the money– that I know — with like with 1/2 of his farm betting portfolio. It was a great trade. He rode that puppy hard. And the last thing I remember him sayin’ to me was… “gosh, maybe it’s goin’ to $100…

Too Conservative:

Last year, he called –ready to start lookin’. Missing pretty much all of 2009 & 2010. He’s been reading his Motley Fool email alerts, and wants an income/growth idea. I suggest maybe he look at Hawaiian Electric and The US Utilities index. Decent income, relatively defensive. He likes it. He loads the boat in his account.

Five months later, he sold because the market (yellow line: S&P 500) was “hemorrhaging” — while he was basically flat.

And This Year? Gold:  Chart Since 2004.And a close-up of the last year… 
And today’s headline for Gold…

From Bloomberg (emphasis mine):
Gold is poised for a 21 percent gain in 2012, extending its bull market to 12 consecutive years, as investors hoard record amounts and central banks expand reserves for the first time in a generation.

So, Here’s The Question: 
Knowing what you know now, is my Uncle? (multiple choice)

a) too conservative

b) too early

c) too late

d) too aggressive

e) too naive

________

Who knows… really, I’m just sayin’

Related:
Trump Calls The Top On Gold – September 2011.

 

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16 thoughts on “You’ve Been Warned: My Uncle Just Bought Gold…

  1. Guest

    Nice
    post.  Reminds me of a client who is like
    a canary in the coalmine.  She has an
    uncanny ability to call market bottoms (panic) and tops (ready to buy, buy,
    buy).

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  3. JustFurKids Carol

    Bless His Heart.  The polar opposite of your Uncle is my 92 year old Father-in-law who regularly offers a dire warning that continued involvement in the stock market and we’ll soon be forced to selling apples on the street corner.  I just wink and assure him that I have done quite well selling $AAPLs.

  4. Slackful

    Warning: Free Advice Solicitation
    I got long 5 NQ contracts near last summer’s high, and sold at 730pm a couple hours after the exact low in August, responding to an email from IB that I was close to not having sufficient margin in my account to carry the position.  I misread the email as saying I was in some sort of violation, and bailed in a panic.  NQ has not printed a trade as low as the price I sold since, not even a single contract.  Lost about 22k.  Now, I piled into far out of the money BAC calls the day after Buffett did his preferred deal last fall, in an attempt to get even quickly, and aggressively averaged down as BAC sank to below 5, even buying some Jan ’13 10 calls the last week of December (I started with the Jan ’13 15 strike but that was starting to look a little foolish).  Anyway, BAC closed after hours at 9.88 Friday and I’m about halfway back from the NQ debacle.  Should I hold on or sell on Monday?  Alternatively, I’d take your uncle’s email address.

    Thanks for the mirror, it doesn’t really help but at least it forced me to see reality.  My wife wanted to know why I was laughing uncontrollably, but I thought it was politic to simply say, oh, just a funny article.

  5. iheartWallSt

    I’m glad you liked the post. Unfortunately I’m strictly forbidden from giving any advice in this forum. My tip for you is this: It sounds like you should hire an adviser. 🙂

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  7. Kyith

    the market is not dictated by just one man. there are still alot calling for gold to fall long term wise from this point onwards

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  11. Kevin

    Hysterically accurate. Sometimes I wonder if this is just me.  I spent 10 years in the brokerage and banking industry and believe strongly the US will eventually lose its reserve currency  status and the FED is monetizing the debt becasue we can’t grow out of this mess. As sure as I am about this I only going to go about 25% of the way into PM’s . the rest will be diversified so that I slightly batshit crazy, I’m not 100% batshit broke if I’m wrong

  12. Happycrow

    Our side of the family spelled it with an a, but it’s nice to know ours aren’t the only Bealls with absolutly no head for money.  I thought we were alone…

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