I bought a 29-year TIPS for my retirement account on
January 18, 2011. Other than a very small cash holding, that was the only thing in my account. It yielded roughly 1.9% over inflation. In hindsight, I have absolutely no complaints about that trade.
My IRA planning is now complete. I'm done.
I probably should have said that it was mostly done. That bond accumulated interest over the past 2 1/2 years. I used that interest to buy a 19-year TIPS today. It yields about 1.06% over inflation if held to maturity. That's exactly what I intend to do.
It's been a good 2 1/2 years and it has been an especially good day. My IRA planning is now complete again. I'm also mostly done again.
There were three things I liked about the bond. First, I was concerned that we'd never see 1% real interest rates again in my lifetime. I just don't think our weakened economy can support "normal" real interest rates long-term (which is in sharp contrast to recent stock market euphoria). Second, a 19-year bond is just about perfect for me. I'm 48 years old. It will mature shortly before I am required to start taking
minimum distributions from my retirement account. Third, I could afford it. The least TD Ameritrade would allow me to buy was $9,118.51 today. My account had accumulated $9,581.36 of cash. The last few days have been the first real opportunity to put that cash to work in a way that best matches my future needs.
As a side note, I have no idea how high rates will rise from here. I can say this though. I am not bracing for
mythical 3.5% real interest rates over the long-term. Not even close.
As for the theory that a U.S. currency crisis will soon be upon us, let's just say that I am far removed from that camp. Investors can't seem to get out of
silver fast enough these days. It's down nearly 8% today and roughly 60% from the peak in 2011. Silver treated me well in the past. I owned it from 2004 to 2006. That was good for a 50%+ gain. In hindsight, I missed much of the ride though. That said, there are at least a few "late to the party" investors today who no doubt wish they'd missed the ride entirely.
February 24, 2011
Silver Bubble Construction Set
If these charts have any merit, then silver is either in a bubble or silver has priced in a great deal of future pain for savers. Perhaps hindsight will show that it was a bit of both? It's just one more reason I've been willing to buy 30-year TIPS.
The following was anonymously written in the comments. Note the capitalization of the word silver as if the metal was worthy of our worship at any price.
Very few people on this earth understand Silver
As I write this, Silver is at $45, up $15 bucks since this article was written just eight weeks ago.
The internet is a wonderful thing. You can find articles written over the past few years saying silver was overbought at $12, at $15, at $18, at $20 at $30.. The long awaited correction the "experts" keep warning us about never comes.
None of these "experts" understand the first thing about what is driving silver.
The Internet is indeed a wonderful thing. I'm going to go out on the limb here and once again suggest that the same thing that drove silver was the same thing that drove real estate and the stock market before it (and quite possibly after it). Easy money, sure things, and greater fools!
Just opinions. This is most certainly not investment advice.
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