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On the news of QE2 last Wednesday I couldn't control myself any longer and snapped. I used all my credit cards from 6 years of AORs and bought 140k in Gold rounds and 240k in Silver rounds at an average borrowing cost of 19.6% interest representing 80% of my available credit. I paid about 4.4% premium over spot. I'm planning 4-6 high-rolling trips to Vegas while I service the debt for the next 18 months. At which time I plan cashing out a millionaire or being "broke" and visiting a bankruptcy judge. I foresee and expect some serious AA, but I will manage to stay current with no late payments for at least 18 months - at which time I will be rich or stop 100% of my debt service.

What could go wrong with my plan?

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Am I supposed to say, "pay your bills, deadbeat," right now?

jaytrader (Jun. 25, 2013 @ 4:32p) |

Your supposed to call up the casinos and say "Suckers". They have to pay back to the trustee all Delzy charged on the ... (more)

nsdp (Jun. 25, 2013 @ 6:04p) |

Maybe this is the world's most complicated and complex preemptive PR/marketing plan devised to promote his new (fiction?... (more)

maxfleischer (Jul. 26, 2013 @ 8:34p) |

AU - $1448 per TO - 100 Units

AG - 27.20 per TO - 8600 Units - about 600 lbs.

so I don't have to keep looking it up...
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This man has balls of steel.

I hope you go to jail.

Oy... the parody threads have migrated from OT to finance... lovely...

what couldn't go wrong? Paying 20% interest gold/silver would have to go up like crazy when they're already at multi year high's. That would be like buying a 500k starter home in 2007 thinking it will be worth $2.5 million in 5 years.

Gold could reasonably hit $2k eventually, but yeah, I dont think it will still be $2k or above, 5 years from now.

Usually I can at least understand the crazy thing the OP is saying but I'm at a lost. Can someone translate it for me?

This will either end in tears of joy or tears of agony - there is no middle ground. I just hope OP keeps us updated regardless of the way it turns out.

Some friends of mine, who also frequent this forum, were talking about something similar, kind-of. You do an AOR and get, say, $300k in credit. You spend it all in a few months and never pay on them.

What happens to you? What happens if you were planning to move out of the country and did this?

Discuss.

How about buying Jan 2012 GLD 200 strike calls (equivalent to $2000/oz gold price) for 3.20? This way you get your leverage with the low financing cost the big boys get to pay instead of the 20%. Other than the chance you can go broke, nothing else is wrong.

Two problems... gold has to skyrocket to break even for the 19.6% APR... and you won't be able to file bankruptcy by taking out 380K all at once... you might be able to if you make it look like you were going slowly into debt... but 380K all at once is going to set off tons of red flags for the bankruptcy judge and your BK case can be dismissed based on fraud charges.

It's a bad idea to gamble your life on speculation. I recommend you undo these transactions before there is no turning back.

nycll said: How about buying Jan 2012 GLD 200 strike calls (equivalent to $2000/oz gold price) for 3.20? This way you get your leverage with the low financing cost the big boys get to pay instead of the 20%. Other than the chance you can go broke, nothing else is wrong.It's all about the physical because I'm hedging a systemic collapse like the one all the "experts" say we narrowly averted in 2008.

delzy said: What could go wrong with my plan?

Your plan could be a poor troll, that's what.

i guess this is a joke, but there's nothing funny about going all in on risk assets ... heck kamikaze bb did it himself last week
it's still safe to play ETFs though, physical conversion time is nowhere near. this 'play' may work but it's far from optimal

ZenNUTS said: Usually I can at least understand the crazy thing the OP is saying but I'm at a lost. Can someone translate it for me?
OP took cash out from all his CC (thanks to earlier AORs, had a huge CL available). Bought 140k Gold and 240k silver physical metal. Plans to gamble in Vegas with remaining cash. Speculation is, thanks to QE2, gold/silver prices will skyrocket and OP will be a millionaire in 18 months. If the bet doesnt pay off, OP will bailout on the banks.

mazeroth said: Some friends of mine, who also frequent this forum, were talking about something similar, kind-of. You do an AOR and get, say, $300k in credit. You spend it all in a few months and never pay on them.

What happens to you? What happens if you were planning to move out of the country and did this?

Discuss.

I hear Poland is the country of choice.

Since you're going to Vegas anyway, you might as well take that $380k and put it all on red, and your chances of becoming rich are probably the same as doing this. On the plus side, you won't have to wait 18 months to find out the outcome.

uutxs said: ZenNUTS said: Usually I can at least understand the crazy thing the OP is saying but I'm at a lost. Can someone translate it for me?
OP took cash out from all his CC (thanks to earlier AORs, had a huge CL available). Bought 140k Gold and 240k silver physical metal. Plans to gamble in Vegas with remaining cash. Speculation is, thanks to QE2, gold/silver prices will skyrocket and OP will be a millionaire in 18 months. If the bet doesnt pay off, OP will bailout on the banks.
Your pretty close, but your missing the point of the Vegas trips - it's relates to brettdoyle's comment above.

Fanta said: Since you're going to Vegas anyway, you might as well take that $380k and put it all on red, and your chances of becoming rich are probably the same as doing this. On the plus side, you won't have to wait 18 months to find out the outcome.First off, I couldn't convert my credit to cash so I made purchases. Second the trips to Vegas are not for the purpose of winning, but for the purpose of becoming a known high-roller. This is my insurance policy should I go "broke" - I'll always have a room and a meal comped if you can read between the lines.

I wish BBB was still here.

delzy said: Fanta said: Since you're going to Vegas anyway, you might as well take that $380k and put it all on red, and your chances of becoming rich are probably the same as doing this. On the plus side, you won't have to wait 18 months to find out the outcome.First off, I couldn't convert my credit to cash so I made purchases. Second the trips to Vegas are not for the purpose of winning, but for the purpose of becoming a known high-roller. This is my insurance policy should I go "broke" - I'll always have a room and a meal comped if you can read between the lines. Why wouldnt you just buy a $60k house outright in Vegas and put it in your mama's name?

Taking the "long slow gamble approach" was what CN47 did. If you are going to do this (and I dont recommend it)... Better just to put it all on the roulette table and know in ONE night whether youre a millionaire or broke. Get it over and done with, no 18 months of waiting and wondering.

once you use it a few times without being a high roller they won't send offers anymore.

It seems there would be much more effective means to bet on a complete meltdown than going long on gold. Options, insurance, CDS, ect.

If there is a complete meltdown we also would probably see deflation. House prices, equities, would collapse, trillions of dollars in bonds would be lost, all very deflationary.

Sure gold could go up because of the panic value but in the end you can't hope for much more than preserving value.

So what do you think is going to happen? A meltdown? You would obviously want to stockpile guns/ammo/food in that situation.
Or the govt stepping in and printing money to prevent a meltdown? In which case gold should theoretically hold its value.

Ok, the Vegas things still confusing..

however, in a SHTF scenario. I still say a close family armed to the teeth still beats one lone guy with a ton of gold. Just ask the Mafias and read up on history books.

ZenNUTS said: Ok, the Vegas things still confusing..I'm not trying to be obtuse, but it answers the "where'd it all go?" question - should that ever need answering.

If I thought hyper-inflation was coming, I would want to own at least one house. If I thought a defationary death-spiral was on its way, I would want a defined benefit pension. I guess I'm covered eiher way.

delzy said: ZenNUTS said: Ok, the Vegas things still confusing..I'm not trying to be obtuse, but it answers the "where'd it all go?" question - should that ever need answering.Oh... I got you. Might as well do Poland, it's the FWF way.

xoneinax said: Gold could reasonably hit $20k eventually, but yeah, I dont think it will still be $2k or above, 5 years from now.

Fixed

Jobowoo said: This man has balls of steel. I would say the opposite.

I would maybe state this if the was HIS money that he had accumulated over years of savings and toil. He just took out a high interest loan and is relying on the fact that we do NOT have debtor prisons in the U.S.

What you really ought to do is go buy yourself a decommissioned Crown Victoria police car. Those things are great.

Anyone else see the irony on "betting" it all on an asset that can really only do as well as inflation? In the 1% chance scenario that you "win" this bet, all you got was not losing money (expect apparently ~20% per year), and in the 99% case where you go bust... you go bust.

THAT'S IT MAN, I'M ALL-IN, 100% IN SHORT-TERM U.S. TREASURIES. OHHHHH I'M PSYCHO WATCH ME POST, GIVE ATTENTION.

cameron2003 said: I wish BBB was still hereDarn, I am out of the loop. What happened to him and his alternate Screename, the one who has a Ferrari and lives in NYC? Wasnt that him too?

cameron2003 said: If I thought hyper-inflation was coming, I would want to own at least one house. If I thought a defationary death-spiral was on its way, I would want a defined benefit pension. I guess I'm covered eiher way.

If SHTF then your house will not be safe, as it can get invaded/confiscated by those in power.

If there is a deflationary death spiral, your defined pension is insolvent.

you can't just move to another country to live (legally) - check out visa restrictions

About your 4.4% markup you paid, if you want to sell the stockpile now, how much haircut will you get?

You strategy has a very large negative carry. If gold rises 20% in a year, you just breaks even, before counting the storage cost. You challenge is to pick an exit point especially if the trade turned out to be good but not great.

delzy said:
What could go wrong with my plan?


Due to the increased mileage demands, the Crown Vic fleet could fail

jkimcpa said: cameron2003 said: If I thought hyper-inflation was coming, I would want to own at least one house. If I thought a defationary death-spiral was on its way, I would want a defined benefit pension. I guess I'm covered eiher way.

If SHTF then your house will not be safe, as it can get invaded/confiscated by those in power.

If there is a deflationary death spiral, your defined pension is insolvent.


I was using hyperbole. I don't actually buy into the gloom and doom stuff. What I mean is,

If I thought 13% inflation was coming such as in 1980, I would want to own at least one house. If I thought Japan-style deflation was on its way, I would want a defined benefit pension. I guess I'm covered eiher way.

cameron2003 said: jkimcpa said: cameron2003 said: If I thought hyper-inflation was coming, I would want to own at least one house. If I thought a defationary death-spiral was on its way, I would want a defined benefit pension. I guess I'm covered eiher way.

If SHTF then your house will not be safe, as it can get invaded/confiscated by those in power.

If there is a deflationary death spiral, your defined pension is insolvent.


I was using hyperbole. I don't actually buy into the gloom and doom stuff. What I mean is,

If I thought 13% inflation was coming such as in 1980, I would want to own at least one house. If I thought Japan-style deflation was on its way, I would want a defined benefit pension. I guess I'm covered eiher way.


OK, it's just 13% inflation is a faaaar far away from hyperinflation, and Japanese deflation is no death spiral.

But in your new case, if there was 13% inflation, I would rather have been renting as housing prices go down in high interest rate environments and mortgage the house at a high rate and refi later at a lower rate.

Leaving the gambling part out, you'll need +35% returns over 18 months to break even. Without any additional AA. Say you paid $1400/oz, you'll need gold at $1900 to break even. It's very possible to get to $2000 or beyond but it'll also depend a lot on the extent of the QE2. I also don't understand the 18 months horizon. QE2 should be over by next June (possibly sooner). By then, most of the USD damage and commodities gains will be over. Why keep on paying interest for almost another year after that? Just do the evaluation next June/July.

One thing that could go wrong is if QE2 ends early. The Fed announced that they could buy as much as $600B in treasuries but also that they'll adjust the program as needed by unemployment results and inflation. I don't anticipate this to do anything significantly positive to unemployment. QE1 did nothing so why would QE2 do better. But it's sure to boost inflation at which point maybe someone with a pulse at the treasury may realize QE2 is not working and the program could be stopped before it erodes the USD beyond what's already been done and props commodities to the levels you'll need to really make a large profit.

Thinking of profits, what if you're still in between broke or millionaire in 18 months? Say gambling losses/gains and interest paid + gains on gold/silver balance out somewhat. You can stop debt servicing but you'll still have liquid assets on hand (gold/silver). BK is not gonna discharge the debt without wiping out your liquid assets first. Even then, if you are employed and show potential for repayment, considering the gamble you took that will be obvious to the BK judge, he'll just straddle you with repayment plan. Or you could keep servicing the debt but you're rather unlikely to keep profitting over the long term if you plan to beat 20% APR with gold/silver gains.

As far as the gambling goes, statistically you'll lose money. The more you play the faster. So your gamble on gold/silver even if it pays off could be balanced by gambling losses and interest payments.

I wish you well but to me your chances of ending up a millionaire with the combined scheme seem way slimmer than those of ending up a deadbeat with wrecked credit for 7 years.

If I am understanding the OP properly, he has cashed in the bulk of his available credit for physical assets with likely long-term value* and is hoping they appreciate. He is going to "service" that debt (which I'm assuming means making only minimum payments) for a period of 18 months.

In that time, he is going to go to Vegas and gamble with the remaining credit on his cards, attempting to establish a pattern of being a high-roller. At the end of the 18 months, if he has been successful at gambling his way into a fortune, he will pay his debts. If he hasn't, he will declare BK and have the debts discharged, hiding the cache of the gold and silver while creating the illusion that it was gambled away.

I see only one flaw in the argument: The BK court is going to inquire very closely as to when, and how, that gold and silver was liquidated. Since the OP (evidently) intends to keep it, he's going to have a hard time proving he sold it to pay his gambling debts. The BK court isn't going to take the leap from "I had a comped suite at Caesar's Palace!" to "I sold all my gold and silver and gambled the proceeds away!" without demonstrating that he actually did sell it instead of stacking it in a safe-deposit box somewhere in Arizona.

Skipping 807 Messages...
Maybe this is the world's most complicated and complex preemptive PR/marketing plan devised to promote his new (fiction?) book and movie deals ... At any rate, fact or fiction, it's been a fun read.



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