G0ldfinger

Gold has some excellent physical properties (besided its rareness). The "confidence" you are referring to certainly stems from these properties. And indeed, you have to put a lot of work in to get a little gold out. Just ask our prospectors on here (RH, chris_ct). Hey-ho GOM! I hope everything is well.

Why? Not really.

I think the two charts below should explain it. http://gold.approximity.com/gold-silver_watch.html

It obviously all depends on your personal financial situation and how much savings/assets you have. Say, you are a 40-year old state employee on 50K/year and you have been there long enough to get a 50% final salary pension. Assume 80 years life span. Since all payments are inflation-adjusted, we don't discount them and we assume a retirement age of 65. The future lifetime income is 25x50K + 15x25K = 1.625M. Say you own a house outright, 250K. Say you have another pension fund of 50K, and your truly free assets (your "savings") are 100K (which is nice given you own the house outright and you have a safe job). Total assets: 2.025M. Now you put 10% (10K) of your liquid assets in gold, the rest in cash, and you think you are diversified. OK, let's see. You have 10K/2.025M = 0.494% in gold, most of the rest in a bond (80.247%), a little in the house (12.346%), and 4.444% in cash. 0.494% (i.e. next to nothing) in gold, and the rest in investments (bond, house, stocks, cash!!) that will most likely suck big time. You are NOT exactly well diversified in that case. EDIT: Had to correct my figures. EDIT2: Even if you put all savings (100K) in gold (wuahahaha, ALL eggs in one basket) you are still below 5% gold allocation! Indeed, ALL eggs are still in your bond (lifetime income) basket. Good luck. People who are in such a position (as above, with 10K in gold) and think they hold a lot of gold, they could as well spit into the Pacific and be proud that they raised the water level. EDIT3: One could argue that there has to be tax paid on the income and daily expenses etc. However, that doesn't change the little gold figure too much (even if it doubled it), and in the end all expenses go out of one pot of assets (the ingredients, admittedly, get differently taxed).

Should you go in 100% (with your PM allocation) now? It depends on many things, risk preferences etc. If you have a more than 1-y time horizon, I would def. start averaging in. Silver, however, is still cheaper. Again, it depends on personal preferences. However, say you are a middle-aged lifetime tenured state employee. Your income is a (badly?) inflation-hedged bond. You maybe have a private pension fund (in stocks!?) on the side, and you might even have a substantial amount of money stuck in a house. I think it would be mad to not be 100% in gold then, because you are a HUGE bond, with the rest in shares and houses. That is just so bad, as much gold as possible needs to be bought to make up for this gross (and maybe fairly unintended, but what can you do) mis-allocation. EDIT: Again, the difference of total wealth and liquid wealth is important here. People often don't properly account for their lifetime income etc. In the above case, anything liquid (ie. outside the house and pension found) should possibly be in precious metals just for diversification alone.

The chart divides the price of gold by a theoretical (MZM) price that gold would have to have such that the Fed gold reserves could back the MZM money supply 100%. Since the reserves have (supposedly) been more or less unchanged, you're essentially right that you see something like gold price/MZM. If that ratio today was as high as back at the top in Jan. 1980, the price of gold on Friday (Aug. 20) would have had to be $9,078.54/oz at the AM Fixing. At $1,200, I just can't see the bubble, sorry. Far too much money sloshing around.

So, further to this, here is a GDP:debt chart and a GDP:gold chart. LOW values mean HIGH debt respectively HIGH gold. What do we see. Well, gee, debt is actually at an all-time high (bubble top) EXCLUDING unfunded liabilities(!!), while gold is far off its former highs (not even closing in on the bubble stage yet). Can anyone please tell the Einsteins at Fortune? Cheers. http://gold.approximity.com/since1970/GDP-...-Ratio_LOG.html http://gold.approximity.com/since1970/GDP-...-Ratio_LOG.html

I can, but it is irrelevant since what is really important is relative value in comparison to other monetary or economic measures. For instance, the Einsteins at Fortune think that debt is not in a bubble, but think so about gold, only from looking at the nominal chart. OK, so here is the nominal debt chart. No bubble, eh? http://gold.approximity.com/since1970/US_F...ernal_Debt.html Well, because they don't care about gold, they selectively compared debt or debt payments with GDP. While I don't say anything against that, they also chose to ignore other unfunded liabilities.

Show me the bubble. http://gold.approximity.com/since1959/Gold...rium_Price.html

See also http://www.greenenergyinvestors.com/index....showtopic=10843 .

People rushed to gold in the Weimar hyperinflation and during the Great Depression. It was just for the USD being backed by gold that people would mostly want to hold gold receipts in USD form. So, people who expect the Dollar to do great things this time around might be very disappointed in the end.

A Friend's Capitulation http://www.housepricecrash.co.uk/forum/ind...=31314&st=0 The other two have very small mortgages, they had a flat to sell. Why then are they moving on to shared ownership? Because they believe it's a 'good investment', afterall they were sharing before and they 'made' loads of money so of cause house prices can only go up! It does however highlight the myth that if you start by sharing you will eventually be able to afford your own place. They're getting a 3rd sharer. Madness! Renting a room to a random person is probably out of the question. It would be ironic if he ended up in a HMO that he had 'owned'. Posted 08 June 2006 - 08:56 AM You are correct, it's bloody stupid and it's about expectations, but you have to understand the nightmare this guy's had in HMOs. He's been unlucky with antisocial flatmates, the stories he has to tell are very funny (if they haven't happend to you!). He's basically thrown in the towel, speaking to him, he has the attitude that you see with posters on here sometimes - the "I don't give a shit anymore" attitude. To be fair 27k is not a bad wage. You would have thought that someone on an average wage like that should be able to afford a modest flat to live in, even renting. Posted 12 June 2006 - 10:49 AM View PostFirstTimeBonkers, on Jun 11 2006, 08:26 PM, said: There is nothing particularly inaccurate or unfair about this view, but the problem is that the balance between maximising career prospects and wanting not to live in a hovel changes as the days of your life go by. Most people find this balance by commuting from the surrounding counties. London does not have the monopoly on highly-paid jobs with good prospects. As another thread has shown, for example, it seems that one way forward is to become a local government executive. Yes, it's mainly about expectations. At the moment if one earns 27k, one 'expects' to be able to enjoy a basic standard of living. The fact that due to HPI and the housing crisis you cannot do that makes you feel hard done by, especally as this guy earns more than the people he is sharing with but they are in their early 40s and have been able to take advantage of HPI rather than suffer under it. However, if you change your expectations and realise that in fact 27k does not afford you a decent standard of living in London, you are left with a couple of options. Either increase your wages or move to somewhere cheaper. This is the situation as is. The reality is that the only reason 27k doesn't give you a decent standard of living in London is because of accomodation conditions/ costs. If you live in an HMO hovel for £400 a month you have plenty of money left over for luxuaries such as eating out, buying gadgets and going on holiday even saving for the future, however if you want somewhere decent to live (small one bed flat - 200k?) your mortgage would be about £1200 - £1500 per month which means you are poor. There isn't much in between financally speaking (apart from shared ownership). Posted 27 October 2007 - 09:53 PM Interesting to see this thread resurrected. I guess I should give an update. Since he moved in last July, there has been a shooting outside the front of the building (bullet holes still in the wall of the block) He's witnessed a murder from his balcony, and someone has managed to get planning permission to build another block next to his, spoiling his view (and potentially affecting the value) He can't park (legally) within walking distance, and has rightly backed away from getting a loan for the £25k required for a parking space under the building. Apparently most of the parking spaces for the block remain unsold, as many appartments were bought by BTLs who haven't bought a parking space to go with the flat. It seems there's something of a parking-space price crash there, as people who have sold have had to give away the space with the flat (you're not allowed to park in it if you don't own a flat there) He now has 18 months left on his fixed rate IO, and we've has a good few IR rises and a credit crunch. It's not looking good. Oh, and Elephant is still a crap hole (in case you didn't know) Posted 28 October 2007 - 07:59 PM To be fair, the flat itself is very nice and it is within a walled area or compound so the undesirables stay away from your personal space. He works in a nice part of town and it's pretty easy to get in to town from Elephant, there's nowhere to go out without getting away from the locality but there are plenty of places like that. The day to day (murders and third world style deprivation on your doorstep aside) is a huge improvement from the HMO hell that he had endured before moving in. Longer term things don't look so good though, He is currently single and mortgaged to the hilt. With or without HPI or a HPC, I don't really see where he goes from here. Posted 04 June 2009 - 09:30 AM I shall give you an update. It is as expected! Not surprisingly Elephant is still a crap-hole. The last time I went around to his place there was an angry woman being wrestled into a police van outside the gate of the building. I had to wait until the 3 policeman it was taking to restrain her managed to bundle her into the back before I could press the bell and get the "concierge" to buzz me in! My mate also witnessed a murder last summer. A woman was thrown from the balcony of flat opposite. I won't go into too much detail, suffice to say he was rather shaken up by the experience. (edited: it was actually the summer before last - how time flies!) I can imagine that the value of the flat has fallen substantially since he bought, I haven't checked selling prices in the block, and it isn't something that gets mentioned a great deal. He also now has a serious girlfriend and they want to move in together. Unfortunately, selling up isn't really an option as he and his flatmate almost certainly in neg equity. The only consolation is that because he is on an IO tracker mortgage, the repayments have fallen massively since the drop in IRs. This will make it viable (if he can agree with his flatmate) to rent the whole place out, and use the proceeds to pay the interest and have some extra income to pay rent on another place in a nicer area. Of cause the risks are huge. If IRs rise, they have tenants problems, or there are large voids etc. there is a problem. On top of this redundancies have started at his work and he says he doesn't have much to do day to day, so he is worried about his employment prospects. My feeling is that he will scrape through (unless IRs rise), however this flat will be a millstone for many many years to come. Posted 08 January 2010 - 11:23 PM I guess I should update this - as I do periodically. I will try and keep it anonymous as I don't want anyone to be identified. After 7 months of dithering and waiting for the market to recover - it seems to have recovered (or at least that what they say on the telly) so they have decided to put the flat on the market. An estate agent came around and has valued the flat at the same price they paid for it. (£355k) Whether this is realistic is another matter but that's what has happened. "Great!" I said - trying to avoid an awkward conversation, but apparently it's not great. They are well aware that they will lose out once you include stamp duty and EA fees, and that's if they achieve full asking, which it seems even the Mr Optimism the EA has advised that they will probably not. To add to this, the official valuation was for "flat with parking space" and they haven't bought a parking space. Now I have mentioned earlier in the thread that although there were fewer parking spaces than flats built, the prevalence of BTL has resulted in many un-bought spaces. However these cost £25k and are non-negotiable. So it looks like moving out, letting the place and renting a home is on the cards again. This will work for now as interest rates are so low, but if rates go up it's game over. Judgement day posponed (again). Posted Today, 06:23 PM Time for another update. It's all too predictable! The flat has now been on the market for over 7 months and there have been no offers. I'll say that again, NO OFFERS. Not even "cheeky" offers. Viewing stopped altogether about 2 months ago along with the general slowdown in sales nationally and now the reality begins to dawn. They are not going to sell it for anywhere near £355k. I've explained before that less than that is problematic as they will sustain a large loss. So the only option left is to rent it out and move on. The only problem is that moving on is proving difficult. My mate's flatmate dosen't want to move on. He will have to rent or take on more debt (if he can get another mortgage) he is now struggling financially having had to take a less well-paid job and is now a "homeowner" so sees it as going backwards. My mate wants to move in with his gf (and rent) and is coming under pressure from her to get a move on, so the tensions are building. I suggested getting her up the duff and forcing the situation to a head, but that didn't go down too well I haven't got any better ideas though! Stalemate!

Because it is happening all the time in similar situations?

http://www.telegraph.co.uk/finance/china-b...ging-wages.html Oh-hauerhah! Anyone seeing a problem here? EDIT: A comment below AEP's article then claims: EDIT 2: Also interesting: http://www.bloomberg.com/news/2010-08-17/c...y-andy-xie.html

24K news?

Here's a regularly updated version: http://gold.approximity.com/gold-silver_watch.html

Closing in on an all time high, and then repeat of the mega crash in 1995 (or so)? http://gold.approximity.com/since1971/JPYUSD.html

Chinese perspective (gold pretty much a one-way bet): http://gold.approximity.com/since1981/Gold_CNY.html

Essentially, what he says it that the sheeple can get fleeced for a very long time because they think that something has value which it hasn't. That is why some can profit in a (hyper-)inflation, and why most won't.

Sorry, but they were extremely successful, as can be seen from still rising consumer prices and ridiculously high asset prices in e.g. houses and stocks. The theory has been proven 100% correct - which was to be expected. EDIT: As I have stated before, without QE by the BoE, UK houses prices would possibly be at GBP 10,000 to 50,000 right NOW.

One of the main reasons for the existence of central banks is to prevent a (catastrophic) money supply deflation.

This is exactly where we differ, because the central banks and governments do all so that this does not happen. In the absence of central banks or governments, you'd be right. But this scenario is quite obviously irrelevant.

The reality of too much currency (and hence too much debt) will rule indeed.

Why do you think it is possible to properly separate these notions? Don't you think (in the 'real' economy) someone's heating cost will go up if some 'speculators' buy too much oil or gas?

How many angels have space on the tip of a pin?