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Strange Things in the Precious Metals
Issue #531, July 17, 2018

Buying Years of Retirement
Issue #530, July 09, 2018

Rent-A-Kid for Retirement
Issue #529, July 02, 2018

The Dark Side of Student Loans
Issue #528, June 25, 2018

The Cost of Out-sourcing Convenience
Issue #527, June 18, 2018

Social Security: 66 or 70?
Issue #526, June 11, 2018

Student Loans: There’s (Unfortunately) a Lot More!
Issue #525, June 04, 2018

Co-signing a Note
Issue #524A, May 31, 2018

The Knight Frank Luxury Index and Collectables
Issue #524, May 28, 2018

The Importance of Diversification: The Myth of Diversification
Issue #523, May 21, 2018

How to Save Thousands on Your Food Bill
Issue #522, May 14, 2018

MoviePass and Other Things
Issue #521A, May 10, 2018

Degree Inflation, Long Training Periods, and “Certification”  Part III
Issue #521, May 07, 2018

Degree Inflation, Long Training Periods, and Certification” Part II of III
Issue #520, April 30, 2018

Follow-up on Several Things
Issue #519A, April 25, 2018

Degree Inflation, Long Training Periods, and “Certification”: Part I of II
Issue #519, April 23, 2018

The Kids Birthday Party Hustle
Issue #518A, April 18, 2018

A Pension Question: Part II of II
Issue #518, April 16, 2018

A Physician is an Executive
Issue #517A, April 11, 2018

A Pension Question: Part I of II
Issue #517, April 09, 2018

Is the Correction Over?
Issue #516A, April 05, 2018

Used Car Dealers, Student Loans, the Chinese, and Uncle George’s Rule
Issue #516, April 02, 2018

Starter Homes
Issue #515, March 26, 2018

Redecorating: Beware!
Issue #514, March 19, 2018

NASDAQ Closes at Record High
Issue #513, March 12, 2018

A 40% Chance
Issue #512, March 05, 2018

Several Things
Issue #511, February 27, 2018

Human Capital, Education and Wealth
Issue #510, February 19, 2018

Another Stock Market Update
Issue #509A, February 18, 2018

Some Thoughts on Savings
Issue #509, February 12, 2018

A Stock Market Upfate
Issue #508S, February 10, 2018

Who Can You Trust? Part II of II
Issue #508, February 05, 2018

The Christmas Decoration Pre-worn Jeans Hustle
Issue #Interim Bulletin #507A, February 03, 2018

2018 Outlook for Financial Markets
Issue #507, January 29, 2018

Who Can You Trust? Part I of II
Issue #506, January 22, 2018

Life Insurance Settlements
Issue #505, January 15, 2018

Commodities and Buying the Breakout
Issue #504, January 08, 2018

Buffett Wins His Bet
Issue #503A, January 04, 2018

Practice Real Estate and Free Agency
Issue #503, January 01, 2018

Outlook for 2018: Part III: Stocks and Bonds
Issue #502, December 25, 2017

My Outlook for 2018: Part Ii: Precious Metals
Issue #501A, December 21, 2017

Outlook for 2018: Hard Assets: Part I of III
Issue #501, December 18, 2017

More Thoughts on Bitcoin
Issue #500A, December 14, 2017

Fees and Good Relations with Bankers
Issue #500, December 11, 2017

Salvator Mundi
Issue #499A, December 07, 2017

Should You Rent or Own a Home?
Issue #499, December 04, 2017

A Gift Subscription
Issue #Interim Bulletin #498A, December 02, 2017

Stocks vs Real Estate: Asset Allocation: Part II of II
Issue #498, November 27, 2017

When Good Enough is Fine
Issue #497A, November 22, 2017

Stocks vs Real Estate: Asset Allocation. Part I of II
Issue #497, November 20, 2017

The Saudi Arrests and the Perils of Foreign Investing
Issue #496, November 13, 2017

Gambling and Las Vegas
Issue #495, November 06, 2017

Some Tips on Auto Insurance
Issue #494, October 31, 2017

Bitcoin and the Digital (Crypto) Currencies
Issue #493, October 23, 2017

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

Escheat
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

Contracts
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

THE PHYSICIAN INVESTOR NEWSLETTER

HELPING PHYSICIANS ATTAIN FINANCIAL SECURITY
By Robert M. Doroghazi, M.D., F.A.C.C.

Gold is on the Move

Issue #483, August 14, 2017

    The S&P 500 is up 9% so far this year (with Mr. Trump claiming full credit). But gold is +12%.
    I’ve not written about the precious metals for a while, so a review is in order. Gold is not an investment. Stocks and real estate are investments; they pay a dividend and there is the potential for capital appreciation. Bonds used to be an investment, but are now better considered as “Certificates of Confiscation” (see below). Gold pays no direct cash dividend and costs money to store. Consider gold a storehouse of wealth. In the Old Testament, about 500 BCE, an ounce of gold purchased 300 loaves of bread. Now it buys about 600 loaves (agriculture and farmers are more efficient). In Roman times, an ounce of gold purchased a fine toga. Today it still purchases a fine suit. In 1915, 20 ounces of gold bought a Model T. Twenty ounces of gold still buys a nice car.
    The previous bull market in the precious metals started in 2001 with gold at $255 an ounce. Gold topped out at $1,895 in September, 2011. It backed off, and then suffered a Hiroshima-like smackdown in April, 2013, dropping from $1,535 to $1,395 in one day.
    I believe a new bull market started when gold bottomed in December, 2015 at $1,050. It went straight up to $1,366 in July, 2016, backed off, and has been range-bound this year between $1,200-1,290. Gold closed Friday at $1,286, at the upper end of the range.
 
   
   

    As usual, the big story is currencies. In general, gold and the US Dollar move inversely. The dollar was strong in 2015 and 2016, and gold was weak. Gold has popped because the dollar is down almost 9% this year (I don’t know yet if Mr. Trump is taking credit). The US Dollar Index closed the week at 93.04 (see the graph of UUP, an ETF of the Dollar Index below). The magic number is the recent low at 92.6. If the Index closes below this number, there is little support until the low 80s. Gold will almost certainly take off. For gold, the resistance is where it is right now, $1,300, and then $1,365, the high of 2016.
    Hedge fund manager Ray Dalio recently recommended gold. Many investment advisors suggest a position of 5-10% of your portfolio. Remember, gold is not an investment, its insurance. If you want a position in the precious metals, your core holding should be 1 oz. US Gold Eagles in your personal possession in a safe deposit box at the bank. If interested, I suggest you contact Stephen Davidson at Blanchard & Co (1-888-830-2646). Blanchard has been in business for decades, and Stephen has given me good service and advice for years (Note: Blanchard advertises on my website. I receive no further compensation for this recommendation).
    You can own “paper” gold in 2 ways; either through the futures, which are very efficient, or via the ETF GLD, which can be owned in a brokerage or retirement account.
    The miners are leveraged to the price of gold. Say gold is $1,300 per ounce, and the cost of production is $1,000 = a profit of $300 per ounce. Gold goes up 7% to $1,400. The miner’s profit is now $400 per ounce, an increase of 33%. If interested in the miners, I suggest the ETF GDX, a basket of the largest miners, such as Barrick (ABX), Newmont NEM), Gold Corp (GG), Royal Gold (RGLD), etc.

     
   
    Silver is no longer held by any central banks and is not a storehouse of wealth. Silver was the medium of everyday business. When you went to the store to buy bread and food, you took dimes and quarters, not a $10 gold piece. Silver is more volatile than gold. I would only recommend you consider silver if you really know what you are doing—good advice for all of your investments.
                                                              RMD
    When the US was on the gold standard, there was no inflation. Bonds had a “gold clause” to protect you from being paid off in cheaper, depreciated money. From after the Civil War until WW I, there was deflation. The money you received in dividends on your bond, and the money you received when your bond was redeemed, was worth more than the money lent. Savers were rewarded for their thrift. Now the Federal Reserve has a stated goal of (at least) 2% inflation. The 10-year T-Bill pays 2.2%, after taxes, less than 2%, and when redeemed, your money is worth less. The purchase of a Treasury bill or bond is a guaranteed loss, thus Warren Buffett’s term “Certificates of Confiscation”.
    RMD comment: I again suggest CDs at your local bank as your fixed-income investments.
    I received some nice feedback on last week’s letter about the importance of being able to estimate.
    “Physicians think in probabilities. When you hear hooves, don’t think of zebras, think of horses. But at the same time, physicians understand they may be wrong and it could be zebras, so they act accordingly”.
    RMD comment: For the lay people who take this letter, if you want to impress your physician, say “Common diseases are common”. Ex: if 90% of upper GI bleeding is due to peptic ulcers, and a patient comes in vomiting up blood, if you start with the presumption that they have an ulcer, you’ll be right 90% of the time. Those are pretty good odds. Of course, if things don’t add up, then you start thinking of zebras.
    Since turning 65 last year, I’ve made a list of things which, no matter how smart you are, how good you look, how hard you work, or what good shape you’re in, you can’t deny your age.
    1) Not so long ago, when I went on a trip, the checklist was A) do you have the tickets, 2) do you have the fishing poles and 3) do you have the beer? Now it’s A) do I have my meds, B) do I have my glasses, and C) do I have my hearing aid batteries? 
    2) The highlight of your week, of your month, is a doctor’s office visit where you are told everything looks fine, your blood pressure is 122/74, and no further tests are needed.
    3) And the clincher: this week I received an advertisement from a funeral home encouraging me to sign up for a pre-paid burial.
    Those of you less than 50 won’t appreciate this. Just wait a few years. 
   
     
   

 

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