Investing: Inverse Bond ETFs versus Gold ETFs?

Nichoman,

The IAU works well.

I have an account with USAA, they have many investment vehicles that you may not be familiar with.  Such as options. Which I don't recommend for anyone unless you have been schooled properly.  Point being here, that there is more than one way to make money in a down market than a inverse ETF or ETF.  Just putting the information out there.

I would suggest you look into the basic class found at Achievers Choice Quest  https://www.achieverschoicequest.com/home/tabid/36/Default.aspx  This site is a little hard to navigate.  The basic class 1-5 has more information in one place that actually works than any other I know... It would also answer any question you could have about investing and how to actually protect your investments and make money in any market.

I have also had great success with UDN (inverse to the USD), though I trade the options. 

I know this isn't exactly what you were looking for,but I also know the Achievers Class has all the answers.

Cat

 

 

Hi Nichoman-

    I am no expert at these things, so this is just my opinion.  We recently sold all our GLD etf holdings in our Roth IRAs, out of a growing uneasiness that I felt at holding "paper gold" vs the real thing.  I have read a couple of things that made me concerned that holdings in GLD were potentially vulenerable if TSHTF.  I don't have a good sense of how substantive those concerns are, but I know I felt more comfortable with the idea of physical gold vs a promise of gold being held by someone else, somewhere else. 

   In addition to physical gold, I do have some inverse etfs.  Weiss Research has published some good information about inverse etfs that you might find useful.  First, here is the newsletter that they sent out on inverse etfs.  http://www.moneyandmarkets.com/files/documents/MAM767_Special_Report.pdf .  At the bottom of this newsletter he has a link to a nice table of inverse etfs.  I'll include it here for people's convenience: http://images.moneyandmarkets.com/767/Guide-to-Inverse-ETFs.pdf .  I respect Martin Weiss; he does truly seem concerned about real people, and has been warning about how bad the ratings agencies have been for years.

   One of the thing I liked about Weiss' newsletter is he describes how people could pick inverse etfs to specifically buffer other vulnerable investments in their portfolio that they maybe could not move (e.g., locked in a pension savings plan).  Eg., I bought  EFU, an ulta-short EAFE index to help buffer the EAFE index fund I have locked in my pension fund. 

   There are also some inverse (bear) mutual funds.  I found those useful for my husband's work retirement/investment account, that would not allow us to buy etfs.  We were able to get an inverse mutual fund, DXDDX, Direxion dollar bear, which is 2.5 inverse of US Dollar Index.  The nice thing about this is it provides some buffer against my US Dollar based short term Treasuries in my pension fund.  -I don't like holding dollar based assets, but I can't get them out without quitting my  job, so that was trying to make the best of a bad situation.  

   I hope some of this helps!

I am not an expert either, but my thoughts line up with what pinecarr said.  In my IRA, I have inverse bond funds.  I have physicial gold in a safe place that I have complete control over. 

 It is my understanding that the fundamental problem with IRAs and the like is they are all denominated in USD.  If the USD were to completely collapse, there is nothing you could put into your IRA to protect the value.   Can someone shed more light on this for us?

Affert - please don't misunderstand the simplicity of my response or think I am being trite.

You don't need any more light shed on the subject - you already have it figured out.  If the dollar goes to zero, your IRA is worthless.  Unless your IRA allows you to purchase gold holdings AND have physical possession instead of certificates of ownership, there isn't anything I can think of that will help preserve the value of your IRA in the event of USD = 0.

 

if USD collapses, your account will no longer exist.  banks will be seized.  IRA/401ks will be seized.  complete martial law will be in place.  any money you thought was safe even in a money market fund will be gone.  even if you have assets denominated in foreign currencies but it's done through a US institution, that will probably disappear from your account as well (for those Peter Schiff fans...he's awesome, but doing it through a US institution doesn't protect you from the crash).

the only haven in such a situation is having gold offshore and some cash in a swiss canton bank.

having said that, complete collapse is a long way off.  the world is going to continue in this cycle for a while of believing the USD is the safe haven.  the IRS has proven to be the most effective institution of highway robbery in history...350,000,000 people willingly fork over 30-50% of their income to it.  that's why the world believes US treasury debt is safe...our government forces us to pay the interest on it!!  so not until most of those 350,000,000 sheep wake the heck up and show signs of rebelling will the world turn from US debt and, therefore, cause the dollar to collapse.   

given that won't happen for a long time, I'd personally put the cash in short-term treasuries like Weiss recommends.  if you want to play trends, my personal opinion is that US bonds are on a short-term rally back to their Dec high, and I think gold is going down to 600-700 in the short term.  once it reaches that level, I'd reverse both of those positions...short bonds and go long gold (some of which should be in offshore physical vaults...Perth Mint or the safewealth group in Switz.

 

 

I think they are two similar plays that dont correlate 100% in movement, so it is a way to "diversify" your holdings.  Proceed with caution, downsides tend to hit faster than upsides, and you can never get out of the casino with your money fast enough if bad news (good?) hits. 

 

Its like taking candy from a Bernake!

All...

 

Thanks for the good information and suggestions.   Lots to consider...especially with what's been happening (ironically past 24+ hrs).

As in most things in life, personal tradeoffs and priorities govern.

Key assumption making

1.)  Gold ETF's...will be able to monitor...if/when...need to move to other vehicles.

2.)  There will always be other options (as necessary)...key is timely judgement...personal experiences in multiple disasters (Mt Pinatubo, Mt St Helens, DESERT STORM, etc.)

What i'm saying..."I trust myself" to do the right thing at the right time...to borrow from Chris Martenson.

Major movements to Gold ETF's has been my latest major IRA investment choice.

Still trying to learn and do more research...all ideas welcome!

Thanks Again,

 

Nichoman

Nichoman - Consider learning how to trade in a down market. There is no shortage of material that teaches you the fundamentals behind Put and Call option trading, among other techniques that work in any market environment. Then you can be completely market neutral and trade - even in a downward move. Use the profits to eliminate your debt and make the necessary changes to take care of your family and friends. Once that's done, put some aside for yourself and buy gold, silver, bullets, beans, or whatever you think will be good barter. Then give the rest away in a way that will have a positive influence on the lives of others.

Can you suggest any books and/or specific techniques?

I do have the book "Options As A Stretegic Investment" by McMillan

Have only used options a couple of times though...last time roughly two decades ago.

 

Nichoman