Northwestern Mutual Makes First Gold Buy in 152 Years

[GeezerMan]

Looks like they have an expectation of the dollar going way down. I think there is a good chance of that.

Link

By Andrew Frye

June 1 (Bloomberg) -- Northwestern Mutual Life Insurance Co., the third-largest U.S. life insurer by 2008 sales, has bought gold for the first time the company?s 152-year history to hedge against further asset declines.

?Gold just seems to make sense; it?s a store of value,? Chief Executive Officer Edward Zore said in an interview following his comments at a conference hosted by Standard & Poor?s in Brooklyn. ?In the Depression, gold did very, very well.?

Northwestern Mutual has accumulated about $400 million in gold, and Zore said the price could double or even rise fivefold if the economy continues to weaken. Gold gained 10 percent last month, the most since November. The commodity has more than tripled since 2000, rising for eight straight years. Gold futures for August delivery slipped $4.80 to $975.50 at 4:03 p.m. in New York.

?The downside risk is limited, but the upside is large,? Zore said. ?We have stocks in our portfolio that lost 95 percent.? Gold ?is not going down to $90.?

Policyholder-owned Northwestern Mutual, based in Milwaukee, ranks third by 2008 life insurance premiums according to data from the National Association of Insurance Commissioners. The data excludes annuities.

 

[RyanPaulShaffer]

Smart.

With the current administration planning record deficits (which is an understatement), and printing money like it's going out of style, the dollar isn't going to be worth the paper it's printed on. Hyperinflation is coming...it's only a matter of time. It will make Jimmy Carter inflation look like small time. Gold will always be worth something.

Gold and bottle caps. 😉

 

[LegendKiller]

Originally posted by: RyanPaulShaffer
Smart.

With the current administration planning record deficits (which is an understatement), and printing money like it's going out of style, the dollar isn't going to be worth the paper it's printed on. Hyperinflation is coming...it's only a matter of time. It will make Jimmy Carter inflation look like small time. Gold will always be worth something.

Gold and bottle caps. 😉

Why would gold always be worth something?

As far as this guy. Wow, he had stocks lose 95% of their value. I guess he's a shitty portfolio manager. Considering that, if I had to estimate his prognostication ability, I'd not go to him with advice on how to wipe my ass.

Unless I see Warren Buffett or Bill Gates move into gold in the same manner, I', not worried.

BTW, when was the last time a person so bearish on the USD and US stocks on the Forbes top 5 list?

 

[coloumb]

Originally posted by: RyanPaulShaffer
Smart.

With the current administration planning record deficits (which is an understatement), and printing money like it's going out of style, the dollar isn't going to be worth the paper it's printed on. Hyperinflation is coming...it's only a matter of time. It will make Jimmy Carter inflation look like small time. Gold will always be worth something.

Gold and bottle caps. 😉

OMG..Fallout games are becoming a reality! All we need now is a nuclear war...

 

[jpeyton]

It sounds like Zore's portfolio managers were so incompetent, his new strategy is to hide money under the mattresses (which is essentially what buying gold is). I can't believe this guy is their CEO.

 

[StageLeft]

I think a lot of hedge fund managers, investors, and bum pickers do think that some gold in a portfolio is good, but I suppose they argue about what percentage is. I plan on buying gold bullion. The bars will be next to my shotgun shells and canned goods because when the bombs drop it won't matter if I'm holding shares of GLD anyway. I need the real thing to barter for bandaids and non-ecoli-infected water.

 

[JS80]

I'm torn on gold. On one hand it's a relatively worthless cumbersome hunk of shiny yellow metal. On the other hand, people seem to flock to it in times of economic uncertainty.

 

[bamacre]

Originally posted by: jpeyton
his new strategy is to hide money under the mattresses (which is essentially what buying gold is).

In times of coming inflation, no matter to what degree, it's always better to have gold under your mattress than cash.

Hyperinflation seems to be a worse-case scenario, but high inflation looks to be around the corner.

 

[KB]

I think it is just too late to be investing in gold. If they had started several years ago it would have been a great investment. http://www.usagold.com/gold-price.html

Gold has already risen to high levels as it has been rising in price since 2001, when we had our first recession of the new century. I don't think it is going to be rising at this same rate forever.

Some people buy gold in case the SHTF, but in such situations guns, bullets, water and liquid gold (alcohol) will always be more tradable than gold.

 

[RyanPaulShaffer]

Originally posted by: KB
I think it is just too late to be investing in gold. If they had started several years ago it would have been a great investment. http://www.usagold.com/gold-price.html

Gold has already risen to high levels as it has been rising in price since 2001, when we had our first recession of the new century. I don't think it is going to be rising at this same rate forever. I think it is a new bubble personally.

Some people buy gold in case the SHTF, but in such situations guns, bullets, water and liquid gold (alcohol) will always be more tradable than gold.

Liquid gold...heh.

Bottle caps! Don't forget bottle caps! 😉

 

[jpeyton]

KB has a great point; in any SHTF scenario, goods and services are much more valuable than gold.

Remember when SHTF during hurricane Katrina? People wanted water, food, gas, clothing, batteries, shovels, pumps, etc. Instead of paying $1000/oz for gold, stock up on $1000 worth of goods that you'll need to survive.

As an investment, gold is the last thing I'd buy.

 

[GeezerMan]

Originally posted by: JS80
I'm torn on gold. On one hand it's a relatively worthless cumbersome hunk of shiny yellow metal. On the other hand, people seem to flock to it in times of economic uncertainty.

Well, I can certainly see that in a logical thinking sort of way. Too bad economics is not a pure logical science, with no emotions involved. Some people accept a hunk of gold metal as something valuable. Almost everyone accepts paper Federal Reserve Notes, essentially an I.O.U., issued by a private corporation , as money. What's the answer? Don't ask me. It's a very complicated matter. I believe should the poop really hit the fan, hungry people will trade a gold bar for a hamburger.

 

[jpeyton]

Originally posted by: GeezerMan
I believe should the poop really hit the fan, hungry people will trade a gold bar for a hamburger.

Indeed, so would you rather be the guy with the gold bar, or the guy with the hamburger?

 

[GeezerMan]

Originally posted by: jpeyton

Originally posted by: GeezerMan
I believe should the poop really hit the fan, hungry people will trade a gold bar for a hamburger.

Indeed, so would you rather be the guy with the gold bar, or the guy with the hamburger?

I would want both at different times. If hyperinflation hits, I would not mind some gold for awhile to purchase the things you mentioned above until the gold loses value further along the path of economic destruction. Hopefully, it won't get that bad.

 

[bamacre]

Originally posted by: jpeyton
KB has a great point; in any SHTF scenario, goods and services are much more valuable than gold.

Remember when SHTF during hurricane Katrina? People wanted water, food, gas, clothing, batteries, shovels, pumps, etc. Instead of paying $1000/oz for gold, stock up on $1000 worth of goods that you'll need to survive.

As an investment, gold is the last thing I'd buy.

I don't think people are worried about anarchy, just high inflation. 😉

 

[StageLeft]

Originally posted by: KB
I think it is just too late to be investing in gold. If they had started several years ago it would have been a great investment. http://www.usagold.com/gold-price.html

Gold has already risen to high levels as it has been rising in price since 2001, when we had our first recession of the new century. I don't think it is going to be rising at this same rate forever.

Some people buy gold in case the SHTF, but in such situations guns, bullets, water and liquid gold (alcohol) will always be more tradable than gold.

It may not be too late, although it's too late to miss what happened, but that aside, if the US dollar hits huge inflation, unless the country literally falls apart gold is better than booze and hollow-points.

Why are you guys talking about SHTF? nobody is talking about an investment for the end of the world, but rather an end to the strength of the dollar. That's what this is about--don't extend it to mean it's not as good as guns for when you have to create a hunting pack to get your dinner.

 

[Uhtrinity]

Originally posted by: Skoorb
I think a lot of hedge fund managers, investors, and bum pickers do think that some gold in a portfolio is good, but I suppose they argue about what percentage is. I plan on buying gold bullion. The bars will be next to my shotgun shells and canned goods because when the bombs drop it won't matter if I'm holding shares of GLD anyway. I need the real thing to barter for bandaids and non-ecoli-infected water.

What I don't understand is most people buy gold certificates. This is all on paper and they never have the gold on hand. Also, what stops companies from selling paper gold they don't actually have?

 

[BoberFett]

Originally posted by: jpeyton

Originally posted by: GeezerMan
I believe should the poop really hit the fan, hungry people will trade a gold bar for a hamburger.

Indeed, so would you rather be the guy with the gold bar, or the guy with the hamburger?

If you had dollar bills you could use them to wipe drool off your mouth while the guy with the gold and hamburger are smiling.

 

[jpeyton]

Originally posted by: Uhtrinity
Also, what stops companies from selling paper gold they don't actually have?

The law.

 

[JeffreyLebowski]

Originally posted by: Skoorb
I think a lot of hedge fund managers, investors, and bum pickers do think that some gold in a portfolio is good, but I suppose they argue about what percentage is. I plan on buying gold bullion. The bars will be next to my shotgun shells and canned goods because when the bombs drop it won't matter if I'm holding shares of GLD anyway. I need the real thing to barter for bandaids and non-ecoli-infected water.

Dump the gold now to get more guns and ammo. if/when the shit hits the fan, guns and ammo will be worth more than gold ever will be because you can get ANYTHING with a gun. Your neighbor that stocked up on food and supplies, but has no gun and has no need for gold will gladly give you some food if you havea gun and he doesn't.

 

[LegendKiller]

Originally posted by: bamacre

Originally posted by: jpeyton
his new strategy is to hide money under the mattresses (which is essentially what buying gold is).

In times of coming inflation, no matter to what degree, it's always better to have gold under your mattress than cash.

Hyperinflation seems to be a worse-case scenario, but high inflation looks to be around the corner.

Actually, it has been shown that gold is a horrible hedge against inflation. If you had an ounce of statistical knowledge in your body it'd be pretty easy to explain why, but you don't, so I won't even try.

 

[jpeyton]

Text

The correlation between gold and the US dollar index (DXY) (the average of six major currencies vs. the USD) is minus 0.42 over the last two years, minus 0.44 over the last nine years and minus 0.28 over the last 17 years. A +1 correlation means perfect correlation (gold goes up, dollar goes up), a -1 correlation means perfectly anti-correlated (dollar goes up, gold goes down), and a 0 correlation means no correlation whatsoever. What the above tells you is that the widely held belief that gold goes up when the dollar goes down is not supported by the statistics: a -0.28 correlation is a weak correlation at best and is certainly within the normal volatility that these two date series exhibit.

So, in the US, M3 has gone up by something like 207% over the last 20 years while gold has gone up in USD terms by 58%. So has gold been a hedge against inflation over this time frame? Of course not - stocks have been a better hedge against inflation than gold, and property even more of a hedge than that.

 

[LegendKiller]

Originally posted by: jpeyton
Text

The correlation between gold and the US dollar index (DXY) (the average of six major currencies vs. the USD) is minus 0.42 over the last two years, minus 0.44 over the last nine years and minus 0.28 over the last 17 years. A +1 correlation means perfect correlation (gold goes up, dollar goes up), a -1 correlation means perfectly anti-correlated (dollar goes up, gold goes down), and a 0 correlation means no correlation whatsoever. What the above tells you is that the widely held belief that gold goes up when the dollar goes down is not supported by the statistics: a -0.28 correlation is a weak correlation at best and is certainly within the normal volatility that these two date series exhibit.

So, in the US, M3 has gone up by something like 207% over the last 20 years while gold has gone up in USD terms by 58%. So has gold been a hedge against inflation over this time frame? Of course not - stocks have been a better hedge against inflation than gold, and property even more of a hedge than that.

Ohhh come now, you're ruining my fun! I love to see these RBP fucktards running around defending gold, yet they are really just more shiny-rock fools chasing lies.

 

[GeezerMan]

One thing there are no stats for is the relation of gold and the U.S. dollar during hyperinflation. Hopefully, we don't get to find out.

 

[LegendKiller]

Originally posted by: GeezerMan
One thing there are no stats for is the relation of gold and the U.S. dollar during hyperinflation. Hopefully, we don't get to find out.

Because we've never had a period of hyper inflation, nor will we.