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The Coming Bear Market: Part II How to Prepare
Issue #492, October 16, 2017

Some Observations on Cemeteries
Issue #Interim Bulletin #491A, October 12, 2017

The Coming Bear Market: Part I: The Myth of Buy and Hold Forever
Issue #491, October 09, 2017

The Market makes New Highs
Issue #490, October 02, 2017

The Importance of a New High
Issue #489, September 25, 2017

A Little Insurance: Wealth, War and Wisdom
Issue #488, September 18, 2017

Some Observations
Issue #487, September 11, 2017

How to be Successful in Your Career
Issue #486A, September 07, 2017

How NOT to Buy a Home
Issue #486, September 04, 2017

This Week in the Market
Issue #485, August 28, 2017

Is the “Trump Bump” Running Out of Gas?
Issue #484, August 21, 2017

Gold is on the Move
Issue #483, August 14, 2017

The Importance of Estimation
Issue #482, August 07, 2017

Buying Art and Collecting: Part II of II
Issue #481, July 31, 2017

Buying Art and Collecting in General, Part I of II
Issue #480, July 24, 2017

Physicians need to be More Forceful: Follow-up
Issue #479, July 17, 2017

Physicians need to be More Forceful
Issue #478, July 10, 2017

Your First “Real” Investment
Issue #477, July 03, 2017

Leasing a Watch: Don’t
Issue #476, June 26, 2017

The Importance of Your Children having a Job
Issue #475, June 16, 2017

The Problem with Medical Student Debt is—the Med Schools
Issue #474, June 12, 2017

Critters and Varmints in your Home and Yard
Issue #473A, June 07, 2017

Leveraged ETFs
Issue #472, May 29, 2017

Leasing a Vehicle: Don’t!
Issue #471, May 22, 2017

Issue #470, May 15, 2017

More on Buying Jewelry
Issue #469, May 08, 2017

Buying Jewelry: Gold, Diamonds and Pearls
Issue #468, April 30, 2017

Thomas Sowell: Part III of III
Issue #467, April 24, 2017

Thomas Sowell: Pat II of III
Issue #466, April 17, 2017

Live Close to Where You Work
Issue #465, April 10, 2017

Medtronic in Hospital Management
Issue #Interim Bulletin #464A, April 07, 2017

Thomas Sowell: Part I of II
Issue #464, April 03, 2017

A Political Contribution a an Investment: Part II of II
Issue #463, March 27, 2017

A Political Contribution as an Investment: Part I of II
Issue #462, March 20, 2017

Buffett Selling Vacation Home
Issue #461, March 13, 2017

Advanced Placement (AP) ourses
Issue #460, March 06, 2017

The Importance of a Credit History
Issue #459A, March 02, 2017

A Credit Card Scam
Issue #459, February 27, 2017

The Electronic Health Reord
Issue #458, February 20, 2017

Issue #457, February 13, 2017

Platinum and Palladium
Issue #456, February 06, 2017

Economic Outlook for 2017: Part II of II
Issue #455A, February 02, 2017

Economic Outlook for 2017: Part I of II
Issue #455, January 30, 2017

A Story From Vegas
Issue #454A, January 25, 2017

Land Donation Deals and the IRS
Issue #454, January 23, 2017

The Theory of Gambler’s Ruin
Issue #453, January 16, 2017

Student Loans: But Wait, There’s More!
Issue #452, January 13, 2017

A Second Home
Issue #Interim Bulletin #451A, January 04, 2017

The Consumer Confidence Index
Issue #451, January 02, 2017

Social Security
Issue #450, December 26, 2016

My Outlook for 2017: Part II of II
Issue #449, December 19, 2016

My Outlook for 2017: The Market
Issue #448, December 12, 2016

Medicine in 20 Years
Issue #447, December 05, 2016

Higher Interest Rates
Issue #446, November 28, 2016

Trump and the Markets: The Bad and Ugly
Issue #445A, November 23, 2016

Trump and the Markets: The Good
Issue #445, November 21, 2016

Negative Trends: The Suits aren’t Makin’ Steel
Issue #444, November 16, 2016

The New DOJ Fiduciary Rule
Issue #443, November 07, 2016

Barron’s Conference, Part IV of IV
Issue #442, October 31, 2016

Barron’s Conference, Part III of IV
Issue #Interim Bulletin #441A, October 26, 2016

Barron’s Conference, Part II of IV
Issue #441, October 24, 2016

Barron’s Conference, Part I of IV
Issue #440, October 20, 2016

This Newsletter
Issue #439A, October 12, 2016

Memoirs of US Grant: Vol II
Issue #439, October 10, 2016

More Points on Collecting, Investing and the Economy
Issue #Interim Bulletin #438A, October 05, 2016

Personal Memoirs of US Grant
Issue #438, October 03, 2016

Ideas for a High School Part-Time Job
Issue #Interim Bulletin #437A, September 29, 2016

Collecting, Investing, and the Economy
Issue #437, September 26, 2016

Free College
Issue #436A, September 22, 2016

A Military Commitment to Pay for Med School
Issue #436, September 19, 2016

When a CD isn’t a CD
Issue #435, September 12, 2016

I Made a Mistake
Issue #Interim Bulletin #434A, September 07, 2016

What is Your Spare Time Worth?
Issue #434, September 05, 2016

Credit Cards and Bonus/Loyalty Points
Issue #433, August 29, 2016

The Write-off of Student Loans
Issue #Interim Bulletin #432A, August 25, 2016

412 Retirement Plans
Issue #432, August 22, 2016

Join the Club
Issue #Interim Bulletin #431A, August 18, 2016

The Case for Precious Metals and Hard Assets
Issue #431, August 15, 2016

When the US went off the Silver Standard
Issue #430, August 08, 2016

Why NOT to Open a Restaurant
Issue #429, August 01, 2016

Some Tips on Life Insurance
Issue #428, July 25, 2016

More Observations on Negative Interest Rates
Issue #427, July 18, 2016

Issue #426, July 11, 2016

Is a PhD Worth It? Part II of II
Issue #425, July 04, 2016

Is a PhD Worth It? Part I of II
Issue #424, June 27, 2016

Avoid Part-time real Estate Agents
Issue #423, June 20, 2016

Issue #422, June 13, 2016

The Problem with Auction Reserves
Issue #421, June 06, 2016

Make Full Use of Your Capital Investments
Issue #420, May 30, 2016

The Fed’s Announcement
Issue #419, May 23, 2016

Quit While You’re Ahead: A True Story
Issue #418, May 16, 2016

The Precious Metals
Issue #417, May 09, 2016

Negative Secular Trends: Part Ii of II
Issue #416, May 02, 2016

Negative Secular Trends: Part I of II
Issue #415, April 25, 2016

Not Winning is not the same as not Losing
Issue #414, April 19, 2016

Behavioral Economics: Part II: Weaknesses
Issue #413, April 11, 2016

Behavioral Economics: Part I: Valid Points
Issue #412, April 04, 2016

The Most Important Books I’ve Read
Issue #411, March 28, 2016

Secret to Success: Take Risks and do Things Differently
Issue #410, March 21, 2016

The Over-Priced Food Presentation Hustle
Issue #409, March 14, 2016


By Robert M. Doroghazi, M.D., F.A.C.C.

The Case for Precious Metals and Hard Assets

Issue #431, August 15, 2016

    Gold bottomed at $255 in April, 2001, and after April, 2002, stayed above $300 for good. Silver bottomed a little later at $4.06 an ounce in October, 2001, and after September, 2002, stayed above $5.00. After an amazing 10-year run, silver topped out at $48.70 in April, 2011, and gold topped at $1,895 in September of that year. Of interest is that silver topped first and then did not confirm gold’s high in September.
    Since then, the precious metals, led by the miners and silver, have been weak, grinding lower, and lower, and lower, with intermittent rallies that amounted to no more than bear traps. I believe that the precious metals have now turned, and that $1,049 for gold last December and $13.58 for silver in January were the lows.
    Primary trends are always driven by basic forces. The most important driver of gold is real interest rates, that is, rates relative to inflation. I believe the turn in the precious metals says interest rates are going to stay low. A second driver is currencies: when paper money loses value, people turn to hard (real) assets to preserve wealth. An ounce of gold or an acre of land are constant. The Bank of Japan continues to stimulate, and now the Bank of England has joined the game. Mario Draghi, head of the European Central Bank, says they’ll do “whatever it takes”. The Federal Reserve is there when needed. Interest rates are negative in Germany and Switzerland. 
    Some people I respect have turned bullish on gold, including Jeff Gundlach, Bill Gross, and Jim Grant, who says “paper money will be confetti”. I have been impressed with Jack Chan as a gold market analyst. He called the downturn in the market in 2012, long before the Hiroshima-like smackdown of April, 2013. He feels the market has bottomed and the long term trend is again higher. And let’s not forget George Soros, a guy who is almost always right, clearly one of the most astute (and successful) investors of our time. He was bullish for a long time, got out around the peak, and has again turned bullish on gold.
    If you agree that we are in a bull market in the precious metals, I recommend:
    1) a 5-10% position, with your core holdings being 1 oz. US Gold Eagles in your personal possession (see below).
    2) “Paper” gold. The most efficient way to trade gold and silver is futures. For your brokerage account, GLD, SLV and the ETFs GDX (a basket of the largest miners) and GDXJ (a basket of the junior miners) can be considered.
    3) Timing is always important. The precious metals have been on fire for the entire year, and are due for a rest. The current COT (Commitment of Traders), which looks at the positions of the commercials (smart money) vs. the speculators (dumb money) is currently extremely bearish (the commercials are short and the speculators are long). I wouldn’t chase them here. Rather, wait for a pullback to take your positions, then add more on a breakout above the recent high.
    4) Watch the US Dollar. It has been range-bound from 93-97. If it strengthens, gold will weaken. If the Dollar breaks below 93, the precious metals will take off.
    Hard assets are currently at a multi-decade low in comparison to financial assets. That’s not surprising, considering the stock market is at an all-time high. It’s even less surprising, when you consider that interest rates are at multi-century lows. It’s almost impossible for bonds to become more valuable. I’ve often talked about the DJIA/gold ratio. The high was 43 in 1999. The low was 1 in 1980. The average for the 20th century was 10: that is, it took 10 oz. of gold to buy the Dow. It currently stands at 13.75. Both variables usually change when there is a regression to the mean. In this case, financial assets will lose value when the stock market drops and interest rates increase, and the precious metals will rise.
    If you are so inclined, consider collectables. People are trading in paper money, which they feel will lose value, for hard assets to preserve wealth. Sotheby’s (BID) reported strong earnings and the stock popped. Over the last year, prices on premium baseball cards have gone bonkers. Scott Schilb of Schilb Antiquarian Books here in Columbia recently sold a 1623 1st printing, 1st ed. Saggiatore Assayer Galileo Galilei Astronomy Science Saturn Comets (Galileo’s The Assayer for short) as fast as he could post it on his website.
    Remember 3 things about collectables: 1) Always buy quality: 1 collectable worth $10K is at least twice as valuable as 10 worth $1K. 2) There is no field of investing where knowledge is more important than collectables. 3) Since buyers and sellers fees at auction houses usually amount to 25%, and dealer markups are even higher, you typically must hold something for years just to break even.
    There is never a bad time to buy physical gold. I recommend 1 oz. US Gold Eagles in your personal possession (in the safe deposit box at the bank). Contact Stephen Davidson at Blanchard (888-830-2646). I receive nothing for this recommendation: Stephen has given me good service and Blanchard has been in business for decades.
    The stock market just grinds higher. The VIX (Volatility Index) is at the low for the year. The only caveats at present are that the market is due for a rest, and the fall is often a bad time of the year.
    A subscriber maxes out every year on his retirement plan and heard good things about 412(i) plans. From Investopedia: “A defined benefit pension plan…The plan must be funded by guaranteed annuities, or a combination of annuities and life insurance”.
    RMD comment: I’ll do a newsletter on this in the near future. My initial impression is negative because I don’t like annuities, but I might change my mind after more study.
    In the fall of 2008, I planted some persimmon seeds. Last year the tree was about 7-8 feet high. This year it is 12-13 feet.
    RMD comment: This is to remind you of the Fibonacci sequence (Issue #209, 5/14/12), which is the sum of the two previous numbers:
0,1,1,2,3,5,8,13,21,34,55,89,144, 233, 377, 610, etc.
It has many applications in mathematics, and governs many biological processes, such as branching in trees, phyllotaxis (arrangement of leaves on a stem), the flowering of an artichoke, and the spiral of a shell.
    To test your innate math skills, see how fast and how far you can do the sequence in your head.
    Remember when everyone had their own TV antennas on the roof? 1955: I’m 4 years old. We’re watching KSD (Channel 5, the St. Louis NBC affiliate). Lightning hits the antenna and travels down the wire: TV sparks out and starts to catch on fire. Dad grabs the TV, Mom holds the door open, and dad throws the TV onto the front lawn. 1968: I’m watching the Morning Show on NBC before heading to High School. Lightning strikes the antenna, comes down the wire to the TV, arcs about 8 feet to the metal heating register on the far wall, exploding the adjacent plaster. TV dead. I go to school.
    RMD comment: Now when there’s a thunder storm, the worst thing that seems to happen is “complete signal loss”.   
    The red circles on the bodies of US athletes at the Olympics are due to “cupping”, from placing a suction-cup like device on the skin in hopes of improving athletic performance. Medically, they represent ecchymosis, or the rupture of tiny blood vessels (capillaries) under the skin. This is exactly what happens with a “hickey”.
    RMD comment: this is idiocy. Where is the coach??
    Personal news:
    On Friday, son John and wife Diana had their 3rd child—Angelina. Mother and baby are doing well.
    On Saturday night, we held the 5th annual Doroghazi Eagle Scout Awards, 3 awards of $10K each to young men who earned their Eagle Scout in the Great Rivers Council. It is given to those who excel in their field, with preference for those in Law, Medicine, Business, Science, Engineering, and who have served in the Military.
    This year’s recipients:
    1) Samuel Bergin, MD: Graduate of the Uniformed Services U. of Health Sciences. Now a Captain in the Air Force, doing his Residency in Emergency Medicine in LV.
    2) Cole Pruitt: Founded the American Collegiate Go Assoc., and produced the film “The Surrounding Game” about Go. Graduated from Brown with Honors and is studying for a PhD in low-energy nuclear structure at Wash U. in St. L.
    3) Kevyn Wiskirchen: graduated Phi Beta Kappa from Truman State and will receive a Master’s Degree from Auburn in Wildlife Sciences. Now with the Missouri Dept. of Conservation.     

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