DoctorSolar

Quick etiquette tip for you Ker its pretty bad form to herald your "come back" with a snippy retort which suggests that while we have all been milling around doing f&ck all in your absence. Poor show.

 

Anyhoo I'll go ahead and bite... you think gold has seen a mania phase?!

 

Joe public knows next to nothing about gold except adverts on TV wanting to buy the stuff off them.

 

The mania comes when Joe public is buying NOT selling.

And while i am biting... you think Gold is going to 500USD and the gold silver ratio will widen to 100+

You do realise this means sub 5USD per oz silver

It costs most producers more than that just to get the stuff out the ground

Mines would close at that level and above ground stocks such as they are would disappear very quickly.

In short sub 5USD silver aint gonna happen.

same faces huh?

Quick etiquette tip for you Ker its pretty bad form to herald your "come back" with a snippy retort which suggests that while we have all been milling around doing f&ck all in your absence. Poor show.

Anyhoo I'll go ahead and bite... you think gold has seen a mania phase?!

Joe public knows next to nothing about gold except adverts on TV wanting to buy the stuff off them.

The mania comes when Joe public is buying NOT selling.

Let's be clear: gold has been sliding down in all currencies, unabated, for many months now. It is only GBP and USD weakness that has seen gold occasionally drift upwards as well.

A quick look at the charts on bullionvault show that over the last quarter the price of gold in:

CAD is down 3%

EUR is down 5%

JPY is down 3%

AUS is down 6%

CHF is down 3%

Down yes but sliding down unabated makes it sound like gold is plummeting with no clear floor.

Im not sure that this view is really backed up by these charts.

For most currencies the drop occured at the beginning of June and price has seemingly stabilised some what since then range trading.

House prices 'continue to rise'

UK house prices rose again in August, increasing by 1.6% from July, the Nationwide has said.

 

The average price of a home is now £160,224, up from £158,871 in July, and following four monthly rises in a row.

 

While prices are still lower than last year, the annual rate of decline in property values slowed sharply to 2.7%, compared with July's 6.2% fall.

Sigh!

The reslience of the almost genetic desire to own property in the UK never ceases to amaze me.

Just heard back from my solicitor about another flat here in Edinburgh which went for significantly over the valuation price. In fact they bid so much over they broke in to the next stamp duty threshold thus tripling their fees. Money no object apparently. From what I have been seeing first hand going out and about viewing and researching, residential property prices in central Edinburgh have hardly fallen at all if anything from their peek values.

Here's hoping Bubb and G0ldfinger are right about the next down leg approaching.

When you position yourself for a depression and that depression you envisaged doesn't come, its well, rather depressing

Since home loans are "non-recourse" in the USA this surely causes greater downward pressure on prices than in countries that will pursue you for the full purchase price even when you are in negative equity.?

http://www.dailywealth.com/archive/2009/aug/2009_aug_03.asp

My Friend Can't Wait to Default on His Mortgage

By Tom Dyson

Monday, August 03, 2009

 

"We're considering stopping our mortgage payments..."

 

A friend of mine lives in Las Vegas. He and his wife both have safe jobs. They have no kids and no debt. They live in a modest house in the outskirts of the city. Their house has a spare room. They rent it to a friend...

 

In short, my friend and his wife can comfortably afford their monthly mortgage payment. But they may stop paying anyway.

...

A "strategic default" is where the homeowner can afford to make the monthly payment but decides he's better off defaulting anyway.

 

...And in the meantime, his wife can buy a house (the mortgage is only in his name).

 

It's a buyer's market in Las Vegas, and his wife can buy at a 50% discount to what they paid the first time around. Interest rates have fallen... so they'll have lower monthly payments. And to top it all off, the government is offering an $8,000 tax credit to first-time homebuyers who buy a home before December 1, 2009.

 

By defaulting on his loan, he'll save himself over a hundred thousand dollars... and still own a home.

 

"Everyone's doing it," says my friend. "I know three other people who are doing [strategic defaults] too," he says. "They're buying bigger houses with lower monthly payments. And that's just from my work..."

Low interest rates are here to stay, City predicts

Gerard Lyons, chief economist at Standard Chartered Bank, said it was now possible that King would not raise interest rates from their current all-time low of 0.5% during his current term as governor, which lasts until mid-2013.

A large number of people are managing to avoid repossession courtesy of low interest rates. If rates remain this low right out till 2013 a significant number of these people will be able to ride this out easing downward pressure on house prices.

On the other hand we have increasing unemployment and high interest rates for first time buyers. This should lower demand and increase downward pressure. Most folks I speak to don't realise that a first time buyer cannot go straight on to a standard variable rate or borrow at 0.5%!

Finely balanced? Or a pointless fight against an inevitable further fall in house prices?

Mind you, I did like the first question in their FAQ list.

 

Frequently Asked Questions

 

Alchemy: Can base metals be turned into gold?

I recall a post on HPC ages ago where some chap was arguing that investing in gold was a mugs game as eventually scientists will be able to make gold out of other elements. Wish I could find the post now it was hilarious. I remember the chap getting quite indignant saying "and yes the technology does exist" then going on to say gold atoms are produced as a by-product of reactions in large hadron colliders! Not exactly a very cost efficient approach

Well one month on and the flat I mentioned above is under offer for over 172,000 GBP!!

Thats 50,000GBP more than they seller paid for it in January 2005.

It would appear that at least for now the property market in Edinburgh is far from imploding.

 

All of which is highly frustrating as I sold to rent in Edinburgh over a year ago.

I also noticed that an identical property one street down sold for 168,000GBP in August 2008.

So if anything house prices are actually going up, at least in this part of the city.

In fact the more I look at the data (via nethouseprices.com) for this very specific part of town I see that prices have not fallen at all.

Again all very frustrating.

The Scottish property market, especially in Edinburgh, must be imploding - despite reports claiming the opposite

I am going to follow how the sale of this particular property goes:

 

Atholl Terrace, Edinburgh

 

I almost bought this flat for £125,000 in January 2005.

The eventual buyer paid around £122,000:

 

Nethouse prices: search result for Atholl Terrace

 

And now they want over £172,000 for it!

Well one month on and the flat I mentioned above is under offer for over 172,000 GBP!!

Thats 50,000GBP more than they seller paid for it in January 2005.

It would appear that at least for now the property market in Edinburgh is far from imploding.

All of which is highly frustrating as I sold to rent in Edinburgh over a year ago.

Well, looks like the up-trend is broken for now. Well done Z, here is your virtual prize!

 

 

Now, who would like to guess how long it will go?

Im siding with Bob Hoye and can see the gold/silver ratio going out to around 80+

I also side with you RH that a floor for gold sits around 900 USD.

I doubt the low in gold will align with the widest point in the GS ratio i.e. gold will rally before silver does.

So all in all roughly 11.50 USD as the low seems reasonable.

Thanks Stobar! That's the one. I think THIS TIME Prechter might be right regarding gold. Mind you I am not brave enough to sell like in the hope of buying it back again.

Good luck to everyone in what they decide!

I think you are right to keep a core gold holding that you do not trade.

For the average joe such as myself it seems far too dangerous to try and finesse the purchase of a core holding by waiting off for a low that may never come. Most ordinary folks simply don't have the time to constantly monitor for the optimal buying opportunity. A slow and steady nibbling is what is called for. Set aside a set amount of GBP every month or every week and buy gold till you have enough to make a difference to you. That's what i have been doing and its been working out well.

I think gold will go down (450) in 12 months, and then double from there (900) over the subsequent 1-3 years. So if I'm right with that prediction, I'd ike to buy near the bottom, and double my money.

But buying and holding from here would only bring a 50% benefit.

Kudos to you for sticking to your guns and aiming to finesse a further holding in gold. And thanks for taking the time to detail your thinking and plans for the future.

For the vast majority of folks such as myself who just dont have the time to trade with pin-point accuracy, setting aside a set proportion of take home salary to buy gold each and every month from here till lift-off may prove to be more effective. My gut instinct and education provided through members of this site and links out to articles from here tells me that we in the UK are in for a king hell of an inflationary fire storm. No one can say precisely when this will occur but I want to be prepared starting from now. If you don't have a position in gold/silver when this thing kicks off you will most likely experience extreme financial pain.

Till then gold will still perform ok as perceptions swing from deflation to inflation and back. I trade the gold/silver ratio to a limited degree to capitalise on these swings. Profits are booked in gold.

Oh shush ...let me fantasize

 

But seriously, I think this is more than just a USD strength. Gold and oil falling severely in all currencies.

Have you seen this video with a currency trader predicting GBP to fall to parity with USD after the next general election.

From: http://www.youtube.com/watch?v=cPTw5ygGccM

Now even if gold were to fall too $600 (which I don't think anyone seriously thinks it will) folks buying gold with GBP now would still be ok. Downside risk seems very small with a 12 month time window and the upside potential is huge. I guess you could always just buy USD but I am struggling to add to my position there even when i hold my nose

Perhaps the words "all" and "evidence" were a bit strong. Hopefully my last post will clarify my thinking, based upon never taking the market for granted ...and I know you'll all give me loads of stick for it (just as you did when I sold in March), but what if I'm right :o :o

Thanks for taking the time to reply. No stick from me just curious to hear how others are thinking.

When you say gold will be the place to be in 12 months time do you think it will get back above these current levels then? If so a buy and hold type investor would come out ok in the end?

So I decided to get on top of things, and looked at all the evidence today.

I've boiled it all down to a bold prediction:

GOLD IS GOING DOWN TO BELOW GBP 500

I too would be interested in "all the evidence" which led to this bold prediction.

EDIT: Personally I think gold will hold in the 900 - 1000 USD area with a breakout at the end of the year early next. Any weakness in the price of gold will be accompanied by strength in USD. Strength in USD means a weak GBP. So I very much doubt we will see prices go lower than 500 GBP. As rh says gold has been monitised and that puts the floor in at 900 USD.

Cheers and good luck.

So say the "winning team"...

 

While there is still a fair chance of gold making a run at its highs over the short-term, there is considered to be very little chance now of a breakout to new highs

 

http://www.clivemaund.com/article.php?art_id=68

A different take from another "winning team"

Bob Hoye

Institutional Advisors

Aug 3, 2009

 

The sixteen month consolidation of the US$ gold price continues. Based upon the history of August being a pivotal month coupled with the consolidation having a similar price pattern with 1994, 2002 and 2007 we believe that a close above $960 would be expected to trigger a move to the all-time highs.

Bob Hoye Aug 3rd 2009

Sadly, these "motivated" people are ideal sucker-buyers who are oh-so-likely to get caught in the Double bind trap

Yep. The obsession with property in the UK is now a full blown mental illness that affects the vast majority of the population. And I don't say that in any kind of glib way.

Two more people I know well have just sold their respective homes for 10-15% more than what they paid for them in 2005. One is in Glasgow the other South East England. The dead cat bounces on higher.

Has the recent devaluation of the pound been getting noticed much and are people complaining about any higher prices? I live in the Eurozone so cannot observe for myself.

From what I can tell speaking to a wide range of people from a wide range of backgrounds/current situations, this crisis hasn't affected any of them in any noticeable way. Those on tracker/variable rates are feeling hugely better off. Most are perceiving this crisis as something removed from them. All of which makes me think this thing hasn't even really got going yet.

Just back from some open viewings on flats in Edinburgh. Not looking to buy but to get a feel for sentiment and what people are getting for their money. And let me tell you this dead cat bounce is alive and well so to speak lol. These viewings were absolutely mobbed with people. A near constant stream of eager buyers. So much so that there was almost a queue to get in and see some places! And this is with prices not even falling to 2005/6 levels yet.

Most folk seemed to be expectant/new parents. There seems to be a real stigma round here if you are a parent and not on the property ladder snake. Already heard the surprise in peoples voice of "oh you are expecting a child and you are going to continue renting".

Seems people are in the "never a better time to buy" mentality. And have not thought to themselves "oh I wonder what the massive joblosses that have still to come at HBOS/RBS in Edinburgh are going to do to house prices"

Ah well, its a time to keep patient and keep nibbling at gold via goldmoney.

http://news.bbc.co.uk/1/hi/business/8175479.stm

It's precisely this kind of news that causes much frustration. To quote from the Delusionary pricing thread

Sod this, just what I didn't want to hear, Ive got a large deposit in the bank getting no interest and I'm 30 in feb, i allways said if i hadn't bought a house by the time i was 30 I wouldn't bother. as a tradesman I dont want to be working past 50 trashing my body to an early grave just to pay a huge mortgage off. This watching of the monthly figures is mind numbing for me. i should have bought years ago and am a fool for not doing so.

Oh well, onwards and upwards. think i'll start looking at a bigger house to rent as this shitty shoe box is draining my energies. lol. I'm out of HPC! even though i know they will have to fall sooner or later, i just havnt got the years in me.

dammit. this can't be described as a blip now, it's a proper mini-recovereh in house prices.

 

how long will it last? who knows.

 

what is causing it? i can't imagine... like slaughterhouse cattle rutting, the british populace seems determined that, if it's going down, it's taking some overpriced pwoperdee with it. pathetic.

Causing a McEnroe moment for Dr Bubb "are you serious"

Thing is I can kind of sympathise with their frustration.

Property went up for much longer than expected.

It hasnt come down as much as some had expected.

And now they see it going back up again.

They feel they missed out the first time they sure as hell aint going to miss out this time.

Now I agree that this thinking will most likely result in financial pain for those buying now. However, the thing you have to remember is that property has been at worst a reasonable bet for at least 13 years in the UK. It is so ingrained in the public psyche by the decade long relentless property porn shows. It is going to take a LONG LONG time for people to truly become fed up of the whole property thing. This slow motion crash could grind on for many years. Eventually some will think I need to get on with my life and part of that is owning my own home.

I sold to rent but it aint so easy here in the UK. Tenants rights are not what they are elsewhere. We have already had to move accom several times already as landlords pulled the plug on our rental after just 6 months in a couple of places. NOT fun I can tell you. It is entirely understandable that people get worn down by this kind of thing and think sod it I know its over priced but I need a stable home for me and my family, I can afford it and my job is stable.

Frizzers used this chart in Money Morning today too, certainly does look prime - my nerves just can't handle the rollercoaster unless it's going up though!

 

http://www.moneyweek.com/investments/preci...y-in-14975.aspx

Gold has certainly had a massive run in GBP. Charts looking like that do make me feel a shade nervous that a further drop or longer consolidation could be on the cards. But with the state of the UK i feel it still makes sense to nibble my way to a reasonable position from here.

An excellent observation DA...

 

I would go further and add that coin investors needn't concern themselves too much with the spot price on the COMEX these days. However, bullion investors should always seek to take advantage of the Cartel's offerings whenever they're likely to present themselves especially in the manner prescribed above by RH...

Yep. When I buy silver I only ever buy coins and take delivery.

Definitely levels out the volatility you see in the spot price.

However, if, silver were to go near $10 or below I would definitely buy some through goldmoney too and use it to trade or play the gold/silver ratio. Much easier to do through that account than sell the stuff via ebay etc..

Deflation or no deflation, we'll still see sub $10 prices before we'll see +$20 again imho...

Would be interested if you could expand on why you think this.

Thanks

Gold certainly has a lot of "accounting" to do, which is why I think talk of anywhere near $1250 being a top are so misguided.

I agree with you and yet we are now seeing a steady stream of former gold bulls (Bill Bonner, Hugh Hendry, Rick Rule) turning decidedly bearish or at best neutral. Taking the view that gold is solely an insurance policy against catastrophe IF things get bad.

Maybe this type of change in thinking and a clear out of bullish sentiment and weak hands is what we need to go through before the next leg up?