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Old 07-08-2013, 03:49 PM   #626
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I can't hand that off to my kids when I'm gone.
You can do better - more quality years with them.
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Old 07-08-2013, 04:21 PM   #627
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Most reputable dealers charge ~5% over spot in amounts a typical person can afford to buy (a few ounces) Disreputable dealers charge more. Unless you do a wire transfer, they'll charge you another 3-4% to buy with a credit card. Oh, then another 2-3% in shipping fees and insurance. And, if you try to sell it back, you'll incur all those fees again (shipping, handling, payment fees, etc. ) and you won't be getting 5% over spot when you sell (more like 1-2% if you're lucky).

In other words, you're probably losing 15-25%+ in transaction and other fees. That's a huge hit. You're a lot better off buying a zero transaction overhead ETF and using the proceeds to acquire real wealth (real estate) instead of shiny useless metal.
Stacking physical gold is good for long term plans like retirement. You only pay a 5% premium for gold eagles from a brick and mortar store, and it's even less for Krugerrands. It helps to only buy on the dips. Set your money aside and wait for the inevitable dips. A 5% dip will make up for the premium.
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Old 07-08-2013, 05:03 PM   #628
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Stacking physical gold is good for long term plans like retirement. You only pay a 5% premium for gold eagles from a brick and mortar store, and it's even lower for Krugerrands. It helps to only buy on the dips. Set your money aside and wait for the inevitable dips. A 5% dip will make up for the premium.
A brick and mortar store only saves you shipping/handling. You still pay the spot premium + other transaction fees.

And you still end up with a pile of useless shiny metal that's hard to transport, hard to store and hard to sell. And there is absolutely no guarantees associated with it's price.

You're a lot better off investing in something with low transaction fees (ETFs or other equities) and/or with real tangible value (real estate).

What would the picture be like if you had invested in gold or just the DJIA 30 years ago?

Gold
83: ~$400
current: 1,240
years: 30

Annualized Return: = (1240/342) ^ (1/30) - 1 = 0.04 = 4% average annual return

DJIA:
83: ~1200
current: 15200
years: 30

Annualized Return: = (15200/1200) ^ (1/30) - 1 = 0.08 = 8% average (ignoring dividends!) annual return


And that's with a near depression happening in that 30 year period and a gold speculation bubble. (the 100 year average stock market return is around 10%) And, it's before taxes and fees. The taxes and fees associated with investing in gold are a lot higher than the taxes and fees associated with investing in the stock market.

And, if the sh*t really does hit the fan, like it was said, you're much better off stocking up on practical things (real estate, ammo, knowledge, etc.) than shiny chunks of metal.

Last edited by Fedaykin; 07-08-2013 at 05:09 PM..
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Old 07-08-2013, 05:25 PM   #629
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Originally Posted by Fedaykin View Post
A brick and mortar store only saves you shipping/handling. You still pay the spot premium + other transaction fees.

And you still end up with a pile of useless shiny metal that's hard to transport, hard to store and hard to sell. And there is absolutely no guarantees associated with it's price.

You're a lot better off investing in something with low transaction fees (ETFs or other equities) and/or with real tangible value (real estate).

What would the picture be like if you had invested in gold or just the DJIA 30 years ago?

Gold
83: ~$400
current: 1,240
years: 30

Annualized Return: = (1240/342) ^ (1/30) - 1 = 0.04 = 4% average annual return

DJIA:
83: ~1200
current: 15200
years: 30

Annualized Return: = (15200/1200) ^ (1/30) - 1 = 0.08 = 8% average (ignoring dividends!) annual return


And that's with a near depression happening in that 30 year period and a gold speculation bubble. (the 100 year average stock market return is around 10%) And, it's before taxes and fees. The taxes and fees associated with investing in gold are a lot higher than the taxes and fees associated with investing in the stock market.

And, if the sh*t really does hit the fan, like it was said, you're much better off stocking up on practical things (real estate, ammo, knowledge, etc.) than shiny chunks of metal.
That's a good illustration as to why gold is only a short term buy-and sell play. It's a lousy long term investment that only the tin foil brigade and gold bugs can love.

It is the ultimate 'sucker bet' of investing.

Too reinforce your point.

Quote:
After reaching a record high of $850 per ounce in January 1980, gold’s price fell almost 44% in two months. It didn’t reach $850 again until January 2008, meaning it was flat while inflation rose 175%, Mr. Condon calculates. Indeed, today’s gold price is far below its 1980 apex when inflation is factored in: That $850 is worth $2,206 in today’s dollars.
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Old 07-08-2013, 05:34 PM   #630
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I'm no Warren Buffett, but I think the best long term hedge against inflation would be land.
Well, the housing crash of 2008 screwed thousands of real estate people.
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Old 07-08-2013, 05:35 PM   #631
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That's a good illustration as to why gold is only a short term buy-and sell play. It's a lousy long term investment that only the tin foil brigade and gold bugs can love.

It is the ultimate 'sucker bet' of investing.

Too reinforce your point.
Yep, another good point. Average inflation from 1983-present is:

(234/100)^(1/30)-1= 0.03 or 3%

So gold as an inflation hedge is OK, assuming the fees/taxes/etc. don't eat up that last 1%/year (quite possible).

However, simply dumping that money into an index fund gets you a return of triple or more the rate of inflation (after dividends, etc.)

In other words, if you want to actually make money, Gold is a bad bet. And, if you want to have it actually be a hedge against inflation, you better hope there is a speculation bubble or you are totally screwed.

Maybe that's why the speculators have wipping up all the gold bugs? Nah, they'd never use fearmongering to create a financial advantage for themselves!

Last edited by Fedaykin; 07-08-2013 at 05:37 PM..
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Old 07-08-2013, 07:13 PM   #632
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Look at long term cycles and the dow/gold ratio. It shows how many ounces of gold it would take to buy the dow. Between 1980 and 1999, it was an equity bull market. The ratio grows bigger during this leg of the cycle like it did up until 1999. You could have used the same strategy. Buy stocks on the market dips. Wait until it inevitably drops 5% and buy more. Nobody knew that was the top at the time. Since 1999, it's been a better long term strategy to buy gold on the dips. Nobody knows if its the bottom. I don't think the ratio dropped low enough for a long term cyclical turnaround. Gold still hasn't reached it's all-time high set in 1980. I think the ratio will get closer to 1 than 40 long term. Then it will be time to apply this strategy to the stock market. It's not all black and white. It's best to diversify. These cycles can simply be used to determine how much to hedge your long term portfolio.

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Old 07-08-2013, 07:33 PM   #633
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Look at long term cycles and the dow/gold ratio. It shows how many ounces of gold it would take to buy the dow. Between 1980 and 1999, it was an equity bull market. The ratio grows bigger during this leg of the cycle like it did up until 1999. You could have used the same strategy. Buy stocks on the market dips. Wait until it inevitably drops 5% and buy more. Nobody knew that was the top at the time. Since 1999, it's been a better long term strategy to buy gold on the dips. Nobody knows if its the bottom. I don't think the ratio dropped low enough for a long term cyclical turnaround. Gold still hasn't reached it's all-time high set in 1980. I think the ratio will get closer to 1 than 40 long term. Then it will be time to apply this strategy to the stock market. It's not all black and white. It's best to diversify. These cycles can simply be used to determine how much to hedge your long term portfolio.

Market timing, a long term strategy that's virtually impossible......without a time machine.
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Old 07-08-2013, 08:19 PM   #634
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Look at long term cycles and the dow/gold ratio. It shows how many ounces of gold it would take to buy the dow. Between 1980 and 1999, it was an equity bull market. The ratio grows bigger during this leg of the cycle like it did up until 1999. You could have used the same strategy. Buy stocks on the market dips. Wait until it inevitably drops 5% and buy more. Nobody knew that was the top at the time. Since 1999, it's been a better long term strategy to buy gold on the dips. Nobody knows if its the bottom. I don't think the ratio dropped low enough for a long term cyclical turnaround. Gold still hasn't reached it's all-time high set in 1980. I think the ratio will get closer to 1 than 40 long term. Then it will be time to apply this strategy to the stock market. It's not all black and white. It's best to diversify. These cycles can simply be used to determine how much to hedge your long term portfolio.

You entirely miss the point. As a true long term investment, the Dow has performed over twice as well, on average, as gold over the last 30 years.

What you're describing above is NOT long term investment. If you want to toss your money at something for the long term (i.e. a retirement account), it's a LOT better idea to just buy a Dow index fund than to buy and store physical gold.

Full stop.
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Old 07-08-2013, 08:26 PM   #635
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I like to chart the price of gold against Gaff's book sales. You can barely tell one line from the other.
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Old 07-08-2013, 09:07 PM   #636
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You entirely miss the point. As a true long term investment, the Dow has performed over twice as well, on average, as gold over the last 30 years.

What you're describing above is NOT long term investment. If you want to toss your money at something for the long term (i.e. a retirement account), it's a LOT better idea to just buy a Dow index fund than to buy and store physical gold.

Full stop.
You're the one missing the point. The dow performs better, then gold performs better. Three cycles that go back to 1896. That's long term by my definition. You're just looking at one period when gold was coming off it's all time high as a starting point.
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Old 07-08-2013, 09:52 PM   #637
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You're the one missing the point. The dow performs better, then gold performs better. Three cycles that go back to 1896. That's long term by my definition. You're just looking at one period when gold was coming off it's all time high as a starting point.
In my investment lifetime, gold has 'performed' twice, had you invested in gold 1980, you would have got your ass handed to you even if you held it up to the recent $1600 price. Gold lost value during that period in 'today's' dollars because inflation was in triple digits. Gold was held as a hedge against inflation. It failed miserably.

Gold is a sucker bet, the Dow has crushed gold as an investment during that period. And if you also held dividend stocks, you'd have made a fortune.

You really should Google Warren Buffet and gold investing.
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Old 07-08-2013, 10:38 PM   #638
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You're the one missing the point. The dow performs better, then gold performs better. Three cycles that go back to 1896. That's long term by my definition. You're just looking at one period when gold was coming off it's all time high as a starting point.
~1 decade is not the type of investment we're talking about. You expressly said gold was a better investment for long term investing such as for retirement. I quote:

Quote:
Originally Posted by Arkie
Stacking physical gold is good for long term plans like retirement.
The investment period for a retirement plan is ~30-40 years (getting longer all the time). Over that time period, the stock market has always handedly outperformed gold.

Now of course, it's silly to not actively manage your portfolio, so of course you want to follow the cycles. When the markets are good, you buy stocks and other higher risk/higher reward things that will maximize your return (unless you are near retirement of course). When the market does poorly, you shift everything into lower risk/lower reward things like gold/ETFs, bonds, etc. But, putting all or the majority of your retirement into gold is foolhardy. If you really want to not deal with your retirement, your absolute best option is to dump it into an index fund and call it a 4 decade.

Of course, the need to follow those cycles is another knock against physical gold. It gets real expensive really quick to be buying/selling physical gold to follow the market. It will put a huge dent in your gains real quick (see my previous post to GB).

And finally, long term gold cap gains is taxed at 28% (it's considered a collectable and as such taxed differently). Long term stocks are taxed @ 15%. 401k/IRA withdrawls are taxed as regular income (or not taxed during withdrawl at all if you do a roth style). Given current tax rates, for a typical retiree that could mean as much as 2-4 times the tax rate for gold.

No thanks, I'll stick to a nice diverse portfolio that only includes a bit of gold/precious metals ETFs.

Also, gold has been a great investment since 2002ish. I wouldn't trade my AAPL stock for it though.

APPL in 2002: @7/share
in 2013: $420/share
Average yearly return: 45%

Gold in 2002: ~$300
in 2013: $1240
Average yearly return: 13%
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Old 07-09-2013, 09:50 AM   #639
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Gold at best is 3rd or 4th investment after you're maxing out 401ks and other investment vehicles. It's a hedge against inflation to have some money in case of the near worst. In the total collapse some people are calling for, dreaming for, afraid of...whatever you want to call it....in that senario all bets are off. You cannot prepare for it, you can try, but you can't.
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Old 07-09-2013, 10:01 AM   #640
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Well, the housing crash of 2008 screwed thousands of real estate people.
If you look at real estate values over 30 years, you see the big bubble that started in about 2000, and then after the crash, values went down to where they would have been anyway on the same upward continuum. The idiots who got wiped out were the ones buying fix and flips at the top of the bubble. Long term, real estate always goes up. It's not the kind of investment that is going to make you a bunch of money, but it's a much more reliable hedge against inflation than any commodity you can name.
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Old 07-09-2013, 10:24 AM   #641
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If you look at real estate values over 30 years, you see the big bubble that started in about 2000, and then after the crash, values went down to where they would have been anyway on the same upward continuum. The idiots who got wiped out were the ones buying fix and flips at the top of the bubble. Long term, real estate always goes up. It's not the kind of investment that is going to make you a bunch of money, but it's a much more reliable hedge against inflation than any commodity you can name.
Especially if said land has water.
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Old 07-09-2013, 11:35 AM   #642
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What manipulation? How does one "manipulate the markets" to drive the price of a commodity down? Shorting it? The evidence shows they aren't shorting it.

Mind control rays perhaps?
The bond market is rigged -- why not gold?

They've done it before -- it's nothing new. In the 1980s the US intelligence community -- using naked shorts -- drove down the price of oil. The US also persuaded our ally Saudi Arabia to increase production.

The two in tandem drove the world price of a gallon of oil way down to under $10/barrel.

The US oil/gas industry went into a tailspin -- but the goal was nonetheless achieved. The USSR's oil revenues dried up -- bankrupting the Soviets. It's one big reason the Soviet Union collapsed in 1991. There were other causes-- but this covert policy was a major reason.

Don't take my word for it. Check out James Norman's fine book THE OIL CARD.
http://www.amazon.com/Oil-Card-Econo...s=the+oil+card
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Old 07-09-2013, 11:46 AM   #643
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Originally Posted by Fedaykin View Post
~1 decade is not the type of investment we're talking about. You expressly said gold was a better investment for long term investing such as for retirement. I quote:



The investment period for a retirement plan is ~30-40 years (getting longer all the time). Over that time period, the stock market has always handedly outperformed gold.

Now of course, it's silly to not actively manage your portfolio, so of course you want to follow the cycles. When the markets are good, you buy stocks and other higher risk/higher reward things that will maximize your return (unless you are near retirement of course). When the market does poorly, you shift everything into lower risk/lower reward things like gold/ETFs, bonds, etc. But, putting all or the majority of your retirement into gold is foolhardy. If you really want to not deal with your retirement, your absolute best option is to dump it into an index fund and call it a 4 decade.

Of course, the need to follow those cycles is another knock against physical gold. It gets real expensive really quick to be buying/selling physical gold to follow the market. It will put a huge dent in your gains real quick (see my previous post to GB).

And finally, long term gold cap gains is taxed at 28% (it's considered a collectable and as such taxed differently). Long term stocks are taxed @ 15%. 401k/IRA withdrawls are taxed as regular income (or not taxed during withdrawl at all if you do a roth style). Given current tax rates, for a typical retiree that could mean as much as 2-4 times the tax rate for gold.

No thanks, I'll stick to a nice diverse portfolio that only includes a bit of gold/precious metals ETFs.

Also, gold has been a great investment since 2002ish. I wouldn't trade my AAPL stock for it though.

APPL in 2002: @7/share
in 2013: $420/share
Average yearly return: 45%

Gold in 2002: ~$300
in 2013: $1240
Average yearly return: 13%
I agree with you for the most part. You can always cherry pick certain stocks that perform better than gold during a gold bull market. For example, Apple increased 6 fold, while gold quadrupled and the dow doubled over the last 10 years. Also, when it comes to timing the markets, the bull markets for stocks last longer than gold. The average gold bear market lasts about 30 years. The average gold bull market only lasts about 10 years. This one's been dragging on longer due to the Fed manipulating the money supply. We still haven't gone full circle back to 1980 unless you think 2011 was the high for gold. I would disagree with that, but none of us know for sure.
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Old 07-09-2013, 11:53 AM   #644
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The bond market is rigged -- why not gold?

They've done it before -- it's nothing new. In the 1980s the US intelligence community -- using naked shorts -- drove down the price of oil. The US also persuaded our ally Saudi Arabia to increase production.

The two in tandem drove the world price of a gallon of oil way down to under $10/barrel.

The US oil/gas industry went into a tailspin -- but the goal was nonetheless achieved. The USSR's oil revenues dried up -- bankrupting the Soviets. It's one big reason the Soviet Union collapsed in 1991. There were other causes-- but this covert policy was a major reason.

Don't take my word for it. Check out James Norman's fine book THE OIL CARD.
http://www.amazon.com/Oil-Card-Econo...s=the+oil+card
Asylums are full of 'crazy people,' why not you?
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Old 07-09-2013, 12:26 PM   #645
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Gold at best is 3rd or 4th investment after you're maxing out 401ks and other investment vehicles. It's a hedge against inflation to have some money in case of the near worst. In the total collapse some people are calling for, dreaming for, afraid of...whatever you want to call it....in that senario all bets are off. You cannot prepare for it, you can try, but you can't.
Agreed.
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Old 07-10-2013, 11:21 AM   #646
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Looks like the banksters have ****** us again:

Game Over - “It’s All A Farce, The Fed & German Gold Is Gone”


http://kingworldnews.com/kingworldne...d_Is_Gone.html
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Old 07-10-2013, 11:22 AM   #647
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also check out the interview on this with hedge trader William Kaye:
http://www.kingworldnews.com/kingwor...liam_Kaye.html
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Old 07-11-2013, 11:55 AM   #648
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Looks like the banksters have ****** us again:

Game Over - “It’s All A Farce, The Fed & German Gold Is Gone”


http://kingworldnews.com/kingworldne...d_Is_Gone.html
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Old 07-11-2013, 10:37 PM   #649
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~1 decade is not the type of investment we're talking about. You expressly said gold was a better investment for long term investing such as for retirement. I quote:



The investment period for a retirement plan is ~30-40 years (getting longer all the time). Over that time period, the stock market has always handedly outperformed gold.

Now of course, it's silly to not actively manage your portfolio, so of course you want to follow the cycles. When the markets are good, you buy stocks and other higher risk/higher reward things that will maximize your return (unless you are near retirement of course). When the market does poorly, you shift everything into lower risk/lower reward things like gold/ETFs, bonds, etc. But, putting all or the majority of your retirement into gold is foolhardy. If you really want to not deal with your retirement, your absolute best option is to dump it into an index fund and call it a 4 decade.

Of course, the need to follow those cycles is another knock against physical gold. It gets real expensive really quick to be buying/selling physical gold to follow the market. It will put a huge dent in your gains real quick (see my previous post to GB).

And finally, long term gold cap gains is taxed at 28% (it's considered a collectable and as such taxed differently). Long term stocks are taxed @ 15%. 401k/IRA withdrawls are taxed as regular income (or not taxed during withdrawl at all if you do a roth style). Given current tax rates, for a typical retiree that could mean as much as 2-4 times the tax rate for gold.

No thanks, I'll stick to a nice diverse portfolio that only includes a bit of gold/precious metals ETFs.

Also, gold has been a great investment since 2002ish. I wouldn't trade my AAPL stock for it though.

APPL in 2002: @7/share
in 2013: $420/share
Average yearly return: 45%

Gold in 2002: ~$300
in 2013: $1240
Average yearly return: 13%
Yes the stock market has outperformed gold. The trouble with the stock market is that there have been collapses every 7-10 years or so. If you do not have a lot of money to re-invest after a collapse then you will never make that money back.

Rich people do not have this problem they can lose a bunch of money in the market and double their investment knowing that it will bounce back. When you are investing in your retirement and then you lose it. Its gone forever mostly.
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Old 07-12-2013, 06:40 AM   #650
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Yes the stock market has outperformed gold. The trouble with the stock market is that there have been collapses every 7-10 years or so. If you do not have a lot of money to re-invest after a collapse then you will never make that money back.

Rich people do not have this problem they can lose a bunch of money in the market and double their investment knowing that it will bounce back. When you are investing in your retirement and then you lose it. Its gone forever mostly.
You have to remember, you only lose money if you sell during a Bear market.

If you're invested properly and for the long term, you ride it out, and if you hold dividend yielding stocks, you continue to get the same income.
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