Bonds

[LittleLightShining]

I have a decision to make concerning bonds. My children have all kinds of bonds that various family members have been buying for them over the years. some are I bonds and some are EE bonds. I'm not sure if there are any others yet. These relatives have been holding onto them for the kids but are planning to hand them over to me for safe-keeping.

My question is this: Should I cash in the bonds now and buy silver? I just want to make sure that the kids have something of value in the future.

 

[Acala]

I hear you

My parents have, over the years, purchased US bonds for my two kids. A few weeks ago I cashed in one fourth of them and converted into gold and silver. I think that is the minimum for prudence. That way if the dollar crashes, you have preserved some of the wealth. On the other hand, if gold and silver crash (which I think unlikely in the long run) you will still have the rest of the bonds.

That being said, I am going to convert another fourh of them to gold and silver soon.

One thing that is nearly certain - there is more inflation on the way. According to Shadowstats, the Fed is increasing the total money supply (M3) at a 20% annual rate. We will be seeing that inflation manifested in prices in one to two years. That is the immediate future of bonds.

 

[jonahtrainer]

I would convert the bonds into gold and silver with GoldMoney.

If you want to be extremely conservative and make sure there is something of value left for your children then I suggest you begin removing the layers of risk between their assets and their purchasing power.

Bonds are financial instruments subject to Counter-Party, Performance, Payment and Exchange Rate risk.

Gold and silver are tangible assets and when held with GoldMoney are subject only to Performance and Exchange Rate risk.

Therefore, you can remove several layers of risk and protect their value.

I actually have a bunch of savings bonds from various relatives that I put in a safe. I recently was back where that safe is and tried to get into it but can't seem to find the combination. My funds are frozen!

 

[LittleLightShining]

It seems like a good idea to convert the bonds.

I'm kind of skeptical about this goldmoney site. I don't like the idea of my assets being across the ocean. I'd rather have them in a place where I can get them whenever I want them. Am I being irrational?

 

[AceNZ]

Government bonds of any kind are a losing proposition. At the very least, you will be losing against inflation. If interest rates go up (as they're likely to, IMO), that could magnify your losses. In the event of a runaway inflation, the value of the bonds would be totally destroyed.

I would sell them and buy gold and/or silver coins. That's something you can hold in your hand and physically pass to your kids when the time comes.

If there's a lot of money involved, then consider an vaulting service that offers allocated storage like BullionVault or GoldMoney.

 

[kyleAF]

I sold Grandma's EE bonds a while back and bought some gold with them. I personally wouldn't hold them whether you're going to go for gold or not. Invest the money in something else, since the bond rate is only around 3.5% anyway. Inflation will FAR outstrip that, so you're basically losing money on the deal... gold or not.

Put it this way: if my Grandma had bought gold for me instead of EE bonds, I'd have... roughly 3 times the FRNs that the bonds ever got me.

 

[jonahtrainer]

It seems like a good idea to convert the bonds.

I'm kind of skeptical about this goldmoney site. I don't like the idea of my assets being across the ocean. I'd rather have them in a place where I can get them whenever I want them. Am I being irrational?

I see nothing irrational with wanting to reduce Performance risk. However, it can be hard to do when you get more assets.

In addition, when you have your assets in your possession there is always the risk of theft by criminals or governmental officials. The confiscation laws in the US are extremely unfriendly to holders of capital. There are advantages and disadvantages to both.

 

[seapilot]

I sold Grandma's EE bonds a while back and bought some gold with them. I personally wouldn't hold them whether you're going to go for gold or not. Invest the money in something else, since the bond rate is only around 3.5% anyway. Inflation will FAR outstrip that, so you're basically losing money on the deal... gold or not.

Put it this way: if my Grandma had bought gold for me instead of EE bonds, I'd have... roughly 3 times the FRNs that the bonds ever got me.

I did the same thing a couple of years ago. Savings bonds was a popular gift for birthdays or to give to a newborn in the family. Instead of carrying on that tradition from past, Im giving silver american eagles to friends/relatives newborns.

 

[LittleLightShining]

Thank you guys all so much for the input. I'm not talking about even a few thousand dollars worth of bonds face-value, so I'm prepared to hold onto the metal.

Do you think it also makes sense to liquidate the piggy banks? I'm in the process of separating out the old pennies, but there are a couple of banks that cannot be opened and re-closed so I'm not sure what to do.

Another question I have, and I know the answer is elsewhere in this forum, is what types of silver should I buy? I'm thinking if I'm investing their "future money" I should invest in collector quality coins.

 

[seapilot]

Thank you guys all so much for the input. I'm not talking about even a few thousand dollars worth of bonds face-value, so I'm prepared to hold onto the metal.

Do you think it also makes sense to liquidate the piggy banks? I'm in the process of separating out the old pennies, but there are a couple of banks that cannot be opened and re-closed so I'm not sure what to do.

Another question I have, and I know the answer is elsewhere in this forum, is what types of silver should I buy? I'm thinking if I'm investing their "future money" I should invest in collector quality coins.

Use a hammer then you wont have to worry about reclosing them. Govt silver is good, silver american eagles are a good coins to start out with.

Collector quality is not necessary just buy whats available whether its tarnished, scratched, colored...it will all sell back to a dealer for the same amount as a collector coin. If you are an ebay seller you can probably get more for collector or rare date coins.

 

[LittleLightShining]

Use a hammer then you wont have to worry about reclosing them. Govt silver is good, silver american eagles are a good coins to start out with.

Collector quality is not necessary just buy whats available whether its tarnished, scratched, colored...it will all sell back to a dealer for the same amount as a collector coin. If you are an ebay seller you can probably get more for collector or rare date coins.

I was just thinking that if I did get collector quality coins then someday if the economy ever straightens out they will be worth more. My oldest son has a pretty good collection going now. He's mostly interested in foreign coins and wheaties just for their novelty but I think as he gets older he will appreciate them more for historical and monetary value.

 

[RSLudlum]

Savings bonds was a popular gift for birthdays or to give to a newborn in the family. Instead of carrying on that tradition from past, Im giving silver american eagles to friends/relatives newborns.

Same here.