Compounded

Some people just don't get it. So, here we go again:

 

Dr Bubb posted this (I have added a bit - not much) on the demographics thread

Herengracht index

An index of house prices in the Herengracht district of Amsterdam.

1. Has always been a prime canal side area; this makes this study unique as areas usually go in and out of fashion.

2. Index extends over 350 years.

The conclusions

1. Over centuries house prices stay the same relative to other prices i.e. there is no long-term house price inflation. Prices in 1979 were much the same as in 1650.

2. Periods of 40 years or more with steady falls and steady rises occur.

3. Economic prosperity and recessions have only a marginal effect on house prices. The real movers are wars and demographics

4. Shocks precipitate dramatic falls – especially wars, but recovery is quite rapid.

5. Falls of 30-40% are common, long term falls seem to need two of these factors – demographic crisis, war, and economic crisis.

6. The writer predicts a long-term falling trend of decades now because we have an absolutely massive demographic problem, which will take prices down by approximately 50%.

7. Every other house price index almost without exception does not extend back earlier than WW2 and most a much shorter time, this is not long enough for the true long-term picture of steady prices to show up. E.g. the Nationwide house price index extends to 1973 and gives a 2%pa long-term price increase. It is erroneous to conclude this is a trend that will continue indefinitely.

It sums up the property boom - it's a 40+ year 2% gain with an 18 year cycle superimposed the gain is due to demographics, it will revert to mean, probably overshooting - as is usual with all corrections.

Could this be a big day for gold? Bradford Bingley is on its **** in the UK and the USA are on a bank holiday.

 

http://www.greenenergyinvestors.com/index.php?showtopic=3551

I just believe in the fundmentals - they will out.

Never in a day though - never ever.

I have had a few thoughts on GF's very high gold values - they seem silly but

Fundamental will out - we have had three generations now of pretty much the whole population deprived of gold money - now fiat is all the population know - gold to them is not money never has been gold is jewellry.

In Law's Mississippi scheme's 5 year fiat experiment gold was circulating alongside the paper money throughout, the transfer back to gold was rapid.

In pre 1900 examples of fiat fiascos that we gold bugs cite circulating gold coin was in the memory of most of the population.

This is different fiat has been around so long that nobody can remember anything else - it has to utterly fail IMO before the dispossed will turn to something else - that will be gold because there is nothing else but even then it may take time for them to realize the fact - they will IMO look for a safe fiat any fiat first.

In 20th Century hyperinflations in mid and lower tier countries the dollar or other more stable fiat was held as the main safe currency not gold.

Gold is not recognised as a currency by nearly everyone.

In short gold is undervalued and still mostly seen as a sort of weird inflation beating commodity that is unlike anything else that may boom to make hansome profit in a crisis;

IMO gold has a hell of a long way to go, it may get there if the dollar collapses

I have just received this from coininvestdirect

QUOTE

Dear Client,

We would like to inform you with regards to an important change to our services offered through http://www.coininvestdirect.com//.

As of July 1st 2008 we will no longer sell silver coins with 7% German VAT. As of then we will apply the UK customary 17.5% VAT. This change is necessary as per Article 34 of the EC directive 2006/112/EC by which mail order businesses are only allowed to ship up to a certain value per year of VAT liable goods to other EC countries.

We have now reached this limit for 2008 in the case of the United Kingdom and therefore have to adapt our VAT to the rate of the ship to country.

Please consider using shipping addresses in Germany or other EC countries, where the limits have not been reached and where we continue to charge only 7% VAT. Alternatively you are always welcome to pick up all gold and silver goods from our warehouse in Frankfurt/Germany. All Gold sales remain of course VAT exempted within the EC.

We would like to thank you for your business and trust in our services in the past and for your understanding. We hope that our large selection of gold and silver coins and bars will continue to satisfy your investment needs.

Please feel free to contact us should you have any questions regarding this notice: sales@coininvestdirect.com

Very nice day for gold, yes and very encouraging to see the $910 resistance looking like becoming support.

 

Incidentally, has anyone heard from Dr.B ?

He is flying from HK to London.

A $20 fall is really not what I would call volatility. It barely makes me blink.

Agree

Look at the yearly chart and it looks totally insignifcant.

Precisely. But when it comes to such squirrel skin inflation the Scandinavians, Finns and Russians have no compare. Just need a decent shotgun (tricky with a hunting rifle, they being small and mobile, little chaps). I wonder what the grey/red ratio is these days?

 

After that they could become so rare that there might be a, horror of horrors, deflation.

 

Cue, our mate, Magpie.

 

(And it's all very well with crows, but just don't stone the wrens.)

Far easier to catch with a trap, than shoot; the meat is a bit greasy but perfectly edible.

Oil taking off. Threatening the all time high. Up four bucks!

It looks like the King of Saudi's promise to pump more no longer moves the market.

Hi - first post - HPC refugee - member there for 4 years & only 24 posts so probably won't post much here either. Avid reader every day though. Read & learn.

 

Need some help please. Has anyone bought silver from coininvestdirect? Looking to buy a skip full of those Austrian philharmonikas. They charge 7% EU VAT. They are shipped from Germany. What I need to know is do you have to pay additional VAT when delivered to the UK.

 

Thanks in advance guys

I have bought some silver coins and did not pay extra VAT over the German 7%.

So long as they are for personal use you only pay VAT once in the country of purchase within the EU.

If you are a business reselling you would claim back the 7% and have to charge 17.5% on the resale.

Many companies have set up mail order businesses in Jersey which confusingly is not in the EU and has no VAT, rules have been changed to try to combat this tax avoidance scheme.

Nope. Not at all. A standard period of consolidation. Absolutely necessary. Nothing goes up in a straight line and I fully expect the gold bull to see far greater falls/rises in the future.

I must be learning from you all because - thats what I believe too and I knew nothing whatsoever about any of this 18 months ago.

Gold to oil ratio is the lowest in over 30 years.

Gold= $871.20

Oil= $134.40

Ratio = 871.20/134.40 = 6.48

If it really is peak oil, this ratio will remain low, or at at least the peak when gold recovers should be low compared to previous peaks IMO.

Perhaps in the future gold/Dow and gold/av house price ratios will be a better guide to gold being in a bubble.

iran is now buying gold and withdrawing their foreign investments.

I think the idea of a fiat currency being a reserve currency will in the end be seen as the ultimate monetary folly.

Yes, this one will be epic, will go down in history.

 

I am just reading this thread here. Scary stuff!

Nothing Is Selling In My Home Town For Between 100k And 200k, Spoken to my local EA.

http://www.housepricecrash.co.uk/forum/ind...=78942&st=0

 

Edited to add: An average UK house will be NO MATCH for 100 oz gold in a few years.

I have read it already, I get the feeling the HPC will after the job losses and the bankrupsies be terrible for nearly everybody.

The boom has been so big the bust will be of similar proportion IMO

ARLA: Average rent down 9%

This HPC is going to be massive.

High oil prices, high food prices, rising inflation and house price falls are all mentioned in the first 10 minutes of BBC Question time!

The UK public are awake.

 

The electorate, through necessity, are becoming more and more interested in economics. "Commodity bubble" or "Extra demand from china", and "peak oil", already introduced to the debate by the invited members of the public.

 

Now why is gold falling in price?????

Its the last resort when you need to protect wealth.

Most people are nowhere near seeing a major problem IMHO when they do gold will do well.

I think we are early - the rises since Browns bottom were just a correction fron a truly stupid low.

Yes, why not starting with the coins. A perfect dip to start buying now.

 

I only hold physical. I have coins, and store gold and silver with BullionVault and GoldMoney. For each 1 oz gold I hold around 50oz silver. To quote James Turk, if gold is like flying a B-747, silver is more like an F-14.

 

You've seen how it dropped from $1,030 to $860 or so. That's the kind of volatility you have to get used to.

I am totally conviced by the fundamentals too.

Bad times always in the past have been good for gold and the biggest ever credit bubble is bursting now.

Peak oil may be hitting now - i am not sure the price rises now are peak oil - it may be dollar flight.

But peak oil will come soon and when it does all hell will happen.

BTW the B as a prefix is used for a bomber the biggest is the B52 (B53 and B54 were types of hydrogen bombs)

Comercial airliners are known by manufacturers name eg Boeing 747

The F is for fighter the F16 is an example.

I too started with gold coins sovs and krugs then a collection of various coins, it got so i did not feel safe with so much at home and i started saving with gold money.

but it is a sad state of affairs when gold is a good investment

I beleive it's true at the moment.

Keep 5% in gold and hope it does not perform - a quote from who knows where but true IMO.

Cgnao is IMO right or at least odds on right.

Derivatives, credit bubble, NR, mortgage madness and HPC all suggest a Kondratiev winter is an imminent

I am a saver, not a waster.

I want to keep it, hopefully grow it and retire comfortably.

The only question I need an answer to is when to exit gold - it's not now I know that.

ohh err.. excitement from bullionvault.... you can now reserve whole 400 Oz LGD bars...

when you log in under the ACCOUNT SETTINGS, there is a RESERVE BARS option. Pity I don't have the 12.5Kg required!!

Bullish or what they are prepareing for the big buyers.

And presumably they would have charged a premium to convert your silver into coin, which could have been a fair deal.

 

I'd be grateful to anyone who has good links to the specifics of these processes.

 

I guess I'm trying to get a root understanding of monetary systems as they were and as they are. So I need to start from the basics.

I am just going from memory of what I learnt from a trip to Venice.

At that time Venice was an island in a world of anarchy, it became rich because trade could flourish the key was enforceable trading contracts and sound money.

In times of anarchy sound money is and has to be precious metal.

But I have a newbie question which was on my mind.

 

In the olden days when gold (and in everyday transaction much more silver) were used as money even before paper promises, what was the mechanism whereby the newly mined gold (and silver) entered general currency?

 

If mines were not exclusively owned by some monetary absolute authority (king or emperor or "central bank") how would a mining business sell their gold or silver? I can understand that if there were minted "coins of the realm", for example, a one ounce coin could purchase one ounce plus a little premium.

 

Is that how it worked?

 

A good mine must have been making a mint. But if I owned a goldmine would the powers that be have stolen it from me?

I think anyone could take gold to the mint and get it made into spendable gold coins.

This was the case in Venice and was instumental in it's becoming so economically important.

Trade creates wealth, to get it you need an honest currency and enforceable contract law, both happened in Venice hence the place became amazingly wealthy.

I think in the US silver could deposited with the mint and later collected as silver dollars.

Fiat currency is not the norm historically speaking.

For the ones that use Coininvestdirect, are you satisfied with the quality of the coins? I do not want to be sent scratchy coins.

I have received QE2 sovs and silver philharmonicas from them, price was good and quality too: I am very satisfied.

An interesting point.

I suppose the newbies asked some decent questions too.

 

There are others who visit GEI who do not read this thread.

 

Maybe we should have a GOLD DEBATE thread, gto try to get more of the Bearish views??

You just cannot be advanced and populist at the same time, it would not work a bit like trying to attract Fortnum and Mason's customers and Netto's at the same time.

IMO you have an excellent advanced investment site. Stick to what you do well.

The newbies questions helped me then because teaching is the best way to learn a subject.

I think the more advanced people GF esp got tired of the the constantly repeated newbie questions.

Cant say I have a great deal to offer the site in terms of valuable input. Just here to absorb the info.

Same here, amazingly I was something like the 8th most prolific poster on the old thread.

Nearly all my posts were very basic explanations of why its a good time to buy gold now to people who knew nothing about gold.

Such people do not visit this thread, this is a shame as we are no longer spreading the word about gold.

However, the move here has come at about the right time for me.

Oh boy. My pension fund is surely full of this stuff.

I started a thread on gold in a pension in the other place's Metals forum - sank without trace, Crudefool and Silver Bull replied and have done it.

Well I dithered but have finally bitten the bullet l applied on the 10th of March - I was blo0dy scared Sunday night - the whole of my pension fund is on it's way to Goldmoney in their SIPP.

I have never heard of Berkely Burke the pension operator but then again the more that comes out the more it seems the names I have heard of seem to be charlatans.

I have some trust in James Turk not to put a bunch of crooks in charge of his babies SIPP.

BTW I thought 10% Silver is that what most people here would think is about right.

Thanks, I'll dig deeper around the oil factor. Any comments on the reason for the fairly long correction though? Or was it just that the oil events subsided?

The oil price did not fall significantly in the period between the two oil shocks, however the gold price did.

I seem to remember OPEC agreed to adjust production so the price remained more or less steady.

Perhaps fear was a big mover of the gold price.

(2) Compounded pointed out how this was a period between two crisis situations (oil crisis 1/2 basically). We may see something like it (see also Jim Puplava's Orio cookie theory), but I somewhat doubt that any correction would be similarly serious.

I agree, the banking mess is not going to subside quickly and looks as though its going to get alot worse.

This has got me thinking about peak oil

+In both oil shocks oil production fell by 3-5% but growth in oil output soon recovered.

+Oil production probably peaked in 2005 and as oil production follows a bell curve it is not changing much yet.

+In five years time it is estimated that oil production will be falling by 3% every year.

+Oil shortage spells higher prices for oil which is inflationary. (Bullish for gold)

+With a demographic crisis as well as the credit bubble busting and the oil price rising it looks as though the recession will be long and painful.

+An oil crisis is typically very bullish for gold.

Sorry if off topic.

Opinions appreciated. 1st purchase.

I have £5k and want to buy some coins, probably 1oz krugs. I have made enquiries and may go with chard.

Two things.

1. I had planned to make my 1st purchase when the spot price was $900 but held off believing there would be a pull back. it never really came.

what is the probability of a pullback now as opposed to a continued rise.

 

2. Anyone here used chards, if so are they ok?

 

 

FWIW I expect it will be a purchase I will keep for probably 5 years so should I just dive in now?

I have used them and highly recommend them.

Telephoned order, sent cheque coins arrived about 2 weeks later.

What I'm particularly interested in is info around why the 1975-76 downleg happened (if there was a reason?)

 

Any views, comments and analysis much appreciated

 

p.s. Also an ex-follower of the gold thread from HPC. Prefer the maturity shown here though I got into gold in 2005 after following a thread by DrBubb so many thanks for raising my awareness!!

Could it be more to do with geopolitical factors.

1st spike Oil embargo following Yom Kippur war of October 1973

The 1973 oil crisis began on October 17, 1973, when the members of Organization of Arab Petroleum Exporting Countries (OAPEC, consisting of the Arab members of OPEC plus Egypt and Syria) announced, as a result of the ongoing Yom Kippur War, that they would no longer ship oil to nations that had supported Israel in its conflict with Syria and Egypt (the United States, its allies in Western Europe, and Japan).

2nd spike Iran revolution, Saddam invaded Iran, Soviets invaded Afghanistan.

The 1979 (or second) oil crisis in the United States occurred in the wake of the Iranian Revolution. Amid massive protests, the Shah of Iran, Mohammad Reza Pahlavi, fled his country in early 1979, allowing Ayatollah Khomeini to gain control. The protests shattered the Iranian oil sector. While the new regime resumed oil exports, it was inconsistent and at a lower volume, forcing prices to go up. Saudi Arabia and other OPEC nations, under the presidency of Dr. Mana Alotaiba increased production to offset the decline, and the overall loss in production was about 4 percent

Oil and gold prices do tend to move together.

Is peak oil bullish for gold?