Ron Paul wiped out on the stock market

[SystemError]

Ouch.

I really do feel bad for him. I don't react from the gut with Ron Paul the way I do a lot of Republicans (including his kid). I genuinely feel bad for him, and I think he did have some pretty decent ideas, even if he framed them the wrong way. He believed in his idea to the end.

That said, this makes me angry about articles like these touting Ron Paul as some investing mastermind.

A few weeks ago, we figured out what was happening to the Ron Paul portfolio — the former Texas congressman's 64% investment in gold and other rocks — and it wasn't pretty.

His portfolio is comprised of major miners and a handful of juniors, and displays a marked lack of diversification.

Investment manager William Bernstein told the Wall Street Journal that “This portfolio is a half-step away from a cellar-full of canned goods and nine-millimeter rounds.”

We looked at Ron Paul's most-recently disclosed portfolio. Granted, he may have picked up the stocks at any point in the past several years, so he's probably still above water on the investments. It's also conceivable that since he's left public life he's pared back a lot on his holdings. So we're just going based on what's public.

Still, these have taken a shellacking, and it's likely that he's lost a significant percent of his net worth, assuming he's held on to them over the past six months.

Here's what has happened:

Newmont Mining Company: –37.29%
Goldcorp Holdings: –34.64%
Barrick Gold: –48.17%
Agnico Eagle Mines : –35.78%
Allied Nevada Gold Corp: –68.48%
Alumina Common: +6.32%
Anglo Gold Ashanti Ltd. –44.13%
BrigusGold Corp. Com MPV: –39.18%
Claude Resources Inc: –56.39%
Coeur D'Alene Mines Corp: –47.21%
Hecla Mining Co: –47.74%
El Dorado Gold Corp: Not Listed
IAM Gold Corp: –65.40%
Kinross: – 44.11%
Lexam Explorations Inc: – 57.57%
Mag Silver Corp: –-40.50%
Metalline Mining Co: Not Listed
Pan American Silver: –35.97%
Silver Wheaton Corp: –37.50%
Virginia Mines Inc: —16.48%
Vista Gold Corp. –53.9%
Viterra Inc +0.81%
Wesdome Gold Mines Ltd: –43.29%

All told, the average loss was -40.3% over the past six months

Given that The Wall Street Journal reported that Paul's portfolio was worth between $2.44 million and $5.46 million — and that 64 percent of his assets were in these precious metal stocks — a very loose estimate is that Ron Paul has lost between $624,640 and $1,397,760 over the past six months, based on the average loss of his mining holdings. This assumes a 40.3% loss on 64% of his holdings.

A lot of that pain has come in the past two days alone. Here's what has happened to the portfolio since last Thursday:

Newmont Mining Company: -12.51%
Goldcorp Holdings: -11.38%
Barrick Gold: -18.03%
Agnico Eagle Mines : -15.59%
Allied Nevada Gold Corp: –16.23%
Alumina Common: -10.47%
Anglo Gold Ashanti Ltd. –16.41%
BrigusGold Corp. Com MPV: –16.19%
Claude Resources Inc: –19.32%
Coeur D'Alene Mines Corp: –14.74%
Hecla Mining Co: –13.27%
El Dorado Gold Corp: Not Listed
IAM Gold Corp: –16.67%
Kinross: – 21.19%
Lexam Explorations Inc: – 17.78%
Mag Silver Corp: –-21.50%
Metalline Mining Co: Not Listed
Pan American Silver: –14.41%
Silver Wheaton Corp: –14.30%
Virginia Mines Inc: —11.36%
Vista Gold Corp. –13.58%
Viterra Inc +0.0%
Wesdome Gold Mines Ltd: –1.79%

Pretty bleak.

[Grumman]

Looking at IAM Gold Corp as an example, it looks like the share price has returned to its pre-crash level. In other words, someone who bought these shares at the peak of the panic after the 2008 crisis would have lost a lot of money, but for anyone who bought before then, it's back to business as usual, not the apocalypse.

[SystemError]

Looking at IAM Gold Corp as an example, it looks like the share price has returned to its pre-crash level. In other words, someone who bought these shares at the peak of the panic after the 2008 crisis would have lost a lot of money, but for anyone who bought before then, it's back to business as usual, not the apocalypse.

'Course, the problem is that all these goldbugs were sorta counting on the apocalypse...

[Col. Crackpot]

Holy fuck! Forget about taking haircut, he took a throat cut! At least he is consistant and believes his own bullshit.

[Flagg]

BAHAHAHAHAHAHAHAHA! Gold isn't a bubble! It's real money unlike all that legal tender we only use for buying goods and services.

[Sea Skimmer]

In fairness buying stock in gold mines makes a lot more sense then buying gold itself. While the mining stocks are very volatile, more so then the price of gold, a lot of them pay dividends, big ones in the last couple years, and that means you make actual money in real time.

Buying gold of course has that little problem of if the apocalypse comes, you have to sell it for paper money to actually spend the fucking stuff. Otherwise all your money is as fake as paper is. Plus the government would just seize it unless you have it locked in a personal safe, at which point you have to pay to have it tested for purity if you ever want to sell it at full market price again. Seizure of gold mines themselves seems less likely then another round of government gold seizure.

[Starglider]

Gold mining stocks are ridiculously volatile and have consistently underperformed for at least the last five years. Anyone messing with them is either day trading on the volatility, cunningly hedged or an idiot. Also;

Seizure of gold mines themselves seems less likely then another round of government gold seizure.

The vast majority of gold investment is in ETFs and unallocated accounts, not physical, which is as trustworthy as any other bank or ETF (i.e. not very these days but it's all relative).

Plus the government would just seize it unless you have it locked in a personal safe, at which point you have to pay to have it tested for purity if you ever want to sell it at full market price again. Seizure of gold mines themselves seems less likely then another round of government gold seizure.

Actual physical can be conveniently stored in good delivery vaults in most financial cities (certainly New York, London, Zurich, Hong Kong). Outright confiscation is unlikely in the first place (a crisis move that would occur well after outright bank collapses, market crashes, savings & pension confiscation) and very unlikely to hit all of those locations. As such home gold ownership can at best be considered a low priority component of end-of-civilisation type prepping (excepting numenistic coin collecting of course).

More interesting than miners fading for the nth time is the recent spike and crash of Bitcoin, which went from $60 to $210 in just over two weeks, then crashed to $70 amid liquidity failures and exchange suspensions (currently at $90ish). Bitcoin had a minor bubble in 2011 but this was a full on tulip mania (occuring at the speed of a flash mob) that got massive PR (at least in the financial press) and burned a sizable crowd of get-rich-quick trend chasers. A lot of opinion flying around both ways about impact on the project, obviously this kind of volatility is massively disruptive to attempts to use it as an actual currency, it was a lot of free PR though and arguably gaining any kind of mindshare, even notoriety, was worth it. n.b. I don't have any personal involvement or investment with Bitcoin but I do find it technically and sociologically fascinating.

Plus of course Apple crashing through the $400 floor, I recall plenty of 'Apple can do no wrong $1000 easy' talk when it was at the $705 peak six months back. Crude down $20 YTD as well so that's another SDN investment favourite (well, with aerius at least) not returning at the moment.

[aerius]

I can't say I feel sorry for him or anyone else who's lost money in the past 5 years or so from investing in the markets. You've gotta be fucking out of your mind to invest in our rigged casino markets; trading or speculating, sure, investing, forget it. Ron Paul of all fucking people should know better, then again, maybe not since might just be blinded by his own ideology. Either way, if he lost money in the casino, boo-hoo. I gave up investing in early 2007, since then I've just been doing short term trades and spec plays.

[Stark]

Market ruined by speculation = become a speculator.

[Sea Skimmer]

Gold mining stocks are ridiculously volatile and have consistently underperformed for at least the last five years. Anyone messing with them is either day trading on the volatility, cunningly hedged or an idiot. Also;

Depends on the mine, a lot of them have underperformed because they spent huge amounts of money expanding into marginal production areas because of the massive spike in gold prices. You never want that kind of mining stock, but it'd still beat being one of the people who helped drive gold from 1799 USD an ounce to 1800+ USD an ounce ect.

Actual physical can be conveniently stored in good delivery vaults in most financial cities (certainly New York, London, Zurich, Hong Kong). Outright confiscation is unlikely in the first place (a crisis move that would occur well after outright bank collapses, market crashes, savings & pension confiscation) and very unlikely to hit all of those locations.

Yet that is exactly what the paranoid types are afraid of, a massor worse collapse then the great depression, which is exactly when the US went and seized all the bulk bullion supplies, and when you are bound to get all sorts of massive import/export tarrifs on gold shipments. Fat lot of good it will do you to have gold in Hong Kong if China declares a 95% tax on exporting it, and you happen to live in Europe or the US. If you don't think everyone will collapse then holding a basket of currency would work as well.

I always thought bitcoin was a joke myself. Not because its hopeless in principle but because its not convertible enough to be a good hedge yet, and the regulatory future is too uncertain. Though I see many people now contend that its become far more like a stock then a currency, which seems true enough if it can spike and crash so easily.

[Zaune]

Investment manager William Bernstein told the Wall Street Journal that “This portfolio is a half-step away from a cellar-full of canned goods and nine-millimeter rounds.”

I bet he's got one of those, too.

[Sea Skimmer]

I'm sure he picked a more useful caliber then 9mm. That's no good for hunting, zombies or black helicopter deployed armored UN commandos. .22 LR and .308 is the way to go.

[Broomstick]

Buying gold of course has that little problem of if the apocalypse comes, you have to sell it for paper money to actually spend the fucking stuff. Otherwise all your money is as fake as paper is.

No, more like you have to sell your gold for canned food, medical supplies, and clean water. If the apocalypse comes those items will be worth more than gold in practical terms.

[Starglider]

Depends on the mine, a lot of them have underperformed because they spent huge amounts of money expanding into marginal production areas because of the massive spike in gold prices.

Bear in mind that miner stock indices show even worse survivor bias than normal stock indices, which are themselves getting worse (e.g. the average time of a company in the DJIA is a quarter of what it was in the 1950s). This tends to reduce the 'well at least you'll get dividends' argument particularly for junior miners (aka throwing your money away). Mines go bankrupt all the time, the physical plant and rights sold to a new company and the original shareholders (and sometimes even bondholders) soaked. Also I strongly disagree that gold mines are less likely to be nationalised than physical gold - maybe in the US, but first world countries are only a quarter of gold production even if we generously include Russia. The rest comes from China and developing countries that have a long history of nationalising mines & refineries at the drop of a hat.

it'd still beat being one of the people who helped drive gold from 1799 USD an ounce to 1800+ USD an ounce ect.

Gold is conventionally a relatively low volatility high liquidity inflation hedge with negative correlation to stocks, but that is much less true now for the paper price as the majority of the trading volume is ETFs and the price is overwhelmingly dependent on futures not physical. Due to low industrial usage gold tolerates a paper/physical price disconnect for longer than typical commodities, but even still availability has vanished and I don't think we'll see any further decline in spot without a massive market disruption (cross-asset I mean; one seller dumping 200t at the start of the drop was already a pretty significant disruption for gold). The current ridiculous central bank schemes to perform massive quantitive easing without general inflationary impact are not sustainable and medium to long term I would expect physical gold to resume its former investment role.

Outright confiscation is unlikely in the first place (a crisis move that would occur well after outright bank collapses, market crashes, savings & pension confiscation) and very unlikely to hit all of those locations.

Yet that is exactly what the paranoid types are afraid of, a massor worse collapse then the great depression, which is exactly when the US went and seized all the bulk bullion supplies, and when you are bound to get all sorts of massive import/export tarrifs on gold shipments. Fat lot of good it will do you to have gold in Hong Kong if China declares a 95% tax on exporting it, and you happen to live in Europe or the US.

With the current globalised electronic economy a trade and financial system collapse on that scale would be completely devestating, (for US citizens) your investment portfolio would probably be a secondary consideration to the riot happening outside your window.

If you don't think everyone will collapse then holding a basket of currency would work as well.

The problem there is FX volatility (exceeding gold price volatility for a truly diversified basket) and the fact that central banks are engaging in globally co-ordinated quantitive easing, i.e. inflating everything at once.

I always thought bitcoin was a joke myself.

Bitcoin was/is an applied cryptography experiment. Although I agree that the varous 'you must invest in bitcoin now' peddlers are funny.

Though I see many people now contend that its become far more like a stock then a currency, which seems true enough if it can spike and crash so easily.

Yes this is the basic problem that derailed the original experiment - speculative use is drowning out medium of exchange use - although the bubbles are themselves interesting financial phenomena to study.

[Borgholio]

Looks to me like he made a noob investment mistake...he didn't diversify. Every single one of those stocks is a mining or mineral processing company. He focused his wealth in a single industry and got hammered.

When investing for my own retirement and future child's college funds, I picked mutual funds that are spread out over many industries including tech, mining, manufacturing, medical, agriculture, etc... So if any one industry tanks, it won't take too much out of the overall value of my portfolio. Add to that I have a few different funds...one focuses mainly on domestic companies, one focuses mainly on foreign companies, and so on.

[The Grim Squeaker]

I can't say I feel sorry for him or anyone else who's lost money in the past 5 years or so from investing in the markets. You've gotta be fucking out of your mind to invest in our rigged casino markets; trading or speculating, sure, investing, forget it. Ron Paul of all fucking people should know better, then again, maybe not since might just be blinded by his own ideology. Either way, if he lost money in the casino, boo-hoo. I gave up investing in early 2007, since then I've just been doing short term trades and spec plays.

...Why do you say that?
The period after a financial crash is the perfect time (overall) to invest or buy stocks. (Granted, you still need to pick the stocks themselves wisely).

(outlier example: It certainly seems to work well enough for Warren Buffett).

Looks to me like he made a noob investment mistake...he didn't diversify. Every single one of those stocks is a mining or mineral processing company. He focused his wealth in a single industry and got hammered.
.

Lazy question: Are all those mining companies in the same country? (Or operate on the same continent?) .

In all fairness, a lot of people have been eyeing minerals as an investment (after the killing made by anyone who invested in gold, metals etc' before 2008. I know someone who invested something like 40% of his investment capital in gold around 2005-2006. He made a lot of money (and promptly diversified after the first big spike)).
The problem is always, the lemming rush. (I'm sure there's been at least one burst bubble of gold since 2008, and that's just random guessing)

[Borgholio]

Even if the mining companies are in different countries, a global mining slowdown will still cause problems.

It's good advice about buying AFTER a market crash. I invested a good amount in a fund at the end of 2008 and I made a 30% return so far.

[Lord Relvenous]

Is Ron Paul one of of the ones who pushes the doomsday scenario advertising of gold? If so, fuck him. Those who prey on people's fear are disgusting.

If not, well, after watching my father work in the mining industry for years in a financial capacity, mining companies are a crap shoot. I'm not surprised he lost money if it was all in the industry.

[aerius]

I can't say I feel sorry for him or anyone else who's lost money in the past 5 years or so from investing in the markets. You've gotta be fucking out of your mind to invest in our rigged casino markets; trading or speculating, sure, investing, forget it.

...Why do you say that?
The period after a financial crash is the perfect time (overall) to invest or buy stocks. (Granted, you still need to pick the stocks themselves wisely).

There's a difference between investing and speculating/trading. Investing means I'm putting my money into the company long term on the expectation that they can use it to grow their business and give me a return on my investment via dividends & higher share prices. It relies on a relatively honest & fair market which isn't being excessively gamed by various parties, and where the rules don't change on you every couple months. Without a market which is honest & fair for the most part, it's impossible for an investor to make a reasonable risk assessment and he, along with the companies he's investing in are liable to have their money stolen from them.

Or to put it another way, suppose you're playing craps at a casino. You know what the odds and rules are so you can plan your game accordingly. But suppose the casino is using loaded dice and several other players at the table are casino employees working in collusion with the dealer, plus they change the rules & odds in the middle of a game without telling you. How long would you keep playing once you found out what's really going on?

[ArmorPierce]

Well people who got in right after the crash of the stock market would have made over 100% return over the past 5 years. Over the long term stock market average returns have been somewhere between 8-10% before inflation. Is it going to continue? Maybe not at that level, but by stuffing your money into a mattress you are definitely going to lose money due to inflation. Even if returns match inflation it would have been worth it investing your money into the stock market.

[Civil War Man]

Is Ron Paul one of of the ones who pushes the doomsday scenario advertising of gold? If so, fuck him. Those who prey on people's fear are disgusting.

I haven't heard him pushing the doomsday scenario advertising directly, but he is at least an inspiration for the people who do.

[chitoryu12]

Buying gold of course has that little problem of if the apocalypse comes, you have to sell it for paper money to actually spend the fucking stuff. Otherwise all your money is as fake as paper is.

No, more like you have to sell your gold for canned food, medical supplies, and clean water. If the apocalypse comes those items will be worth more than gold in practical terms.

Assuming you could sell the gold after the apocalypse in the first place. Gold has value outside of its industrial and electronics applications mostly because it's pretty and people say that it's valuable. I think that even cash would maintain some value at the very beginning of a SHTF scenario, but anything not related to immediate survival would depreciate in value at a ridiculous rate. You can't eat gold to survive, or make it into a real weapon, or cure a disease with it, and you can barely wipe your ass with it if you don't mind agonizing anus pain and inability to flush properly.

Even if there was no crash in gold and it maintained its value perfectly all the way up to Z-Day or what have you, people would quickly find that they're NOT the overlords of America because nobody wants bars of soft, heavy, shiny yellow metal. When people are entirely concerned with day-to-day survival, they'll want something they can use as-is.

[Napoleon the Clown]

Is Ron Paul one of of the ones who pushes the doomsday scenario advertising of gold? If so, fuck him. Those who prey on people's fear are disgusting.

I haven't heard him pushing the doomsday scenario advertising directly, but he is at least an inspiration for the people who do.

I haven't heard of him telling people to buy gold to stave off the apocalypse but, from what I understand, he's been saying for decades economic collapse is just around the next turn. Also, he wants the gold standard back. Which amounts to the same thing, saying that only a shiny yellow metal has real value.

[Irbis]

Assuming you could sell the gold after the apocalypse in the first place. Gold has value outside of its industrial and electronics applications mostly because it's pretty and people say that it's valuable. I think that even cash would maintain some value at the very beginning of a SHTF scenario, but anything not related to immediate survival would depreciate in value at a ridiculous rate. You can't eat gold to survive, or make it into a real weapon, or cure a disease with it, and you can barely wipe your ass with it if you don't mind agonizing anus pain and inability to flush properly.

In conditions pretty much closest to apocalypse that we saw in recent times, in was zone of WW II, you could indeed sell gold and silver - at rates approaching handful of gold coins for half of bread or silver candelabre for pound of slightly spoiled meat (historical relations). People even threw away gold and silver objects because they were unwieldy to carry and mobility and burning less energy was more important. And that wasn't as bad as conditions after modern war would be, so, yeah. Though, money lost even more - my great grandfather sold company because he saw WW II coming, he was pretty much wiped out after six months because of wartime inflation and bad conversion rates to wartime money, but after that paper money sort of stabilized, if you call big inflation compared to pre-war one (but not immediate war-start one) stable.

[PeZook]

Of course, people who had connections and ways to actually sell all that gold outside warzones made a killing. There were personal fortunes grown out of nothing more but selling coal on the black market.

So uh by buying gold in case of the apocalypse, you will most likely just fatten the fat cats even more. Possibly the very same fat cats who'll bring it about