Jake

(2) : London Property, in Gold Ounces

If you had bought 171 oz @ £230/oz (£39,330) in 2000 and sold in 2011 (171 oz @ £1050 (£179,550) you would have made 140k.

Even if you sold today at £820 you would have made 100k.

If you had £250k in 2000 and bought gold @£230 you'd have bought 1087oz.

Sell that in 2011 @ 1050 = £ 1, 141,350, profit of £891,350.

Even selling today @ £815 would give you £885k (635k profit).

And at 11 years you'd probably only be part way through a large mortgage.
Mind you in London you would've spent a small fortune on rent...

Over the last 2 years London property has outstripped gold as an investment.

But so has the FTSE or Dow. Question is, is this just an anomaly or the end of the PM bull run? Gold could be seen to have been orchestrated lower and the UK help to buy and lowest IRs and QE push up the housing market, esp London and foreign money.

Gold price to house price ratio

 

Illustrated is a a property I was involved with on the gold to price ratio in London

 

year 2000 £250,000 value 171oz of gold

Year 2011 £500,000 value 462oz of gold

Year 2013 £675,000 value 829oz of gold

 

So property over 11 years has greatly outstripped gold as an investment.

 

 

The

I can't see how your ratios work. Sure in the last 2 years gold to property has taken a hit but back to 2000?? Gold was what 300$/oz. (av was 279.11) or about £220. 220 x 171 is £37,620 or $51,300.

"Gold will only have to be repriced once, that will be more than enough"!

Same goes for gold at, what 800?

From Mar-Oct 08, silver went from near 21 to 9. It was pretty shocking and premiums were high and supply was low but after a month delay or so silver came back for sale as usual. We all know silver has been cut in half again from 48 to present 21 but you can still buy silver ounces if you want to.

I really wonder if enough people care for there to be such a negative impact if silver were to be cut in half to 11? Surely just another buying opportunity for those who understand it?

I am not advocating a move to 11 just pointing out that it could happen again. IMO a great buying opportunity when/if many bulls had thrown the towel in. Remember the move after the 2009 lows, silver climbed to 48!

I think the bank and the governments will do "whatever it takes" to keep their games and livelihoods going...as they have been doing. I'm unsure that that means " all problems solved" however. I'm sure they would love to crash the price in order to take control of the real physicalarket from weak hands...or those who saw "technical damage" or fundamentals. Maybe it will be different this time and we should expect something outside the box such as a crash and then reevaluation?

$11 would be the end of this bull market. Gold would be what, $800? A few weeks at those sort of prices mean the debt and over-leverage problem is fixed, govts running sustainable budgets and new growth is providing employment and real wage growth. $11 silver would mean a definitive sell on pm's and buy the Dow, fund your pension, take out a big mortgage, etc. There wouldnt be a single mine left in operation anywhere.

leverage problem be over? We have seen in the last couple of years

And months really, gold and silver manipulated/crashed lower. It doesn't seem hard for the manipulators to architect water - falling prices. I can see what you mean re. inoperable mines but I don't see the other parts so clearly. We have runaway stock markets ready for a fall. Maybe like in 2008/9 when gold and silver also nose dived.

I would see 11 silver as a huge opportunity to buy not the Dow but more silver/ gold. I don't see the relationship as everything fixed if we do see lows like that. Please explain.

 

Oops - I run my charts in GBP so I think it will hit £11 or $18 (again) before taking off. Mistakes like that are why my avatar is so depressed, I am giving him a bad name!

$11 would be a bit of a bargain! I wonder if we will really see that?

A physical oz in Japan costs the equivalent of 1534 USD. That's a hefty 163 dollar premium when compared to buying in the US/UK.

Suppose that's Abenomics at work for you.

Central banks buying -57% and investor demand down 400%

Probably a good time to buy.

Nice summary of the bigger picture here from CC:

 

http://moneyweek.com/whats-next-for-gold/

 

I happen to agree with this, and I will continue to be quick to bag profits on the sign of a correction, until we re-establish a long term uptrend.

Weren't you "itching to buy" at 1255?

Recent lows may have been a good time to "scratch".

I suspect Dom's article "had" to have been written for the Monetweek masses rather than from his gut.

Silver into the USD21-22 range. If gold should fall to 1000 as some predit, where does this leave silver?

Gold definitely appears to obey the 144D SMA moving average.

 

 

More sitting and waiting. It wasn't my thinking...

Great photo! Great comment and great sentiment!

Gold at 1000 over the next few months would be great by me!

So, Bonds signal their own "forward guidance"?

Where could this push Mortgage rates?

I think this is an interesting video - watch it all.

 

He is going to stop buying silver, and pay off his debts first. There are a number of Youtube videos where "stackers" are holding off in buying mid 2013.

http://www.youtube.com/watch?v=t0xqxnR9ATs

Crazy to have annoying debts like that...with silver at a low point. (then sub 20USD) - a 50+% reduction when he was stacking. Clear debts first, then stack.

Lots of chat between my colleagues and friends about buying houses/starting BTL/property portfolios for the long game.

Pre -frenzy feeling in (parts of) the UK right now.

Where's "There", GF?

 

I think we could see $1500-1600 by October, perhaps sooner

Well, despite being made to sound a fool-especially in a time where house prices are rising and gold has been falling-I'll have a crack at the definition of 'there' for GF according to his Gold to UK house prices chart. He is rather good at charts.

So... he sees on the charts a number between 55 and 80 ounces of gold will buy you the average UK house. The average UK house is now 163k. Let's say 165k. 165k divided by 85 is 1,941. And 165 divided by 55 is 3000.

So 'there' could be anywhere between GBP1900 and GBP3000/oz = USD2,971and USD4,692. Gold at present is GBP 875/oz or USD1,360. Seems crazy unless you remember Gold started at USD252/oz or GBP157 about 13 years ago..(around 1.60 to GBP)...thus Multiple of 5.5. Gold only needs to double here to make GF's chart start to look realisticaly mouthwatering. eg gold at GBP1750x80 ounces=140,000.

With all the damage and debt, printing and trouble we are seeing-yet papering over-it is not beyond the realm of reason to imagine that gold will go far higher than these numbers. And/Or it may not. House prices and stocks may well simply fall-although you'd be seen a fool to suggest so right now...all the more reason to think it, IMHO.

The Squeeze is not over IMHO

Did it start yet?

With the birth of the Royal Baby, Andy Murray winning the tennis,The Diamond Jubilee, the successful Olympics, the UK is just shrugging off bad news. The UK is going through a huge baby boom. Young couples will be further encouraged to buy a house. I don't thing we will see any meaningful crash in UK (we're talking London and the South East) house prices in this economic cycle.

You forget the Heatwave and the elusive World Cup to add to that list and then the good (bad) times roll??

Any more good news for the UK to wallow in? A fracking oil boom perhaps? Oil in the Malvinas? More rich EU immigrants? Passing of Prince Philip? The Queen as the longest reigning Monarch celebrations? Another kiddie for the Royal couple? Disintegration of the EU? Re-election of Cameron as PM? Or Boris?!

Maybe Britain is special. Maybe not.

btw When does 'this economic cycle' end?

Very interesting.

 

Seen in http://www.mauldinec.../ttm

Great read with my morning coffee! Thanks for posting.

Silver $180? A 1000% return in 5 years is, quote, "no problem" ???

 

LOL with those sort of expectations I can't take chumps like GF seriously.

Van, History as 'chump'...

''By the final quarter of 1979, silver prices had risen to levels between $15.00 and $25.00 per ounce. At these levels several physical market forces combined to act against higher prices. Additionally, the two major U.S. futures exchanges that traded silver at the time took steps to force those with margined long positions to liquidate their positions. During the Hunt brothers’ accumulation of the silver, prices of silver bullion rose from $11 an ounce in September 1979 to $49.45 an ounce in January 1980 based on London PM Fix. Silver prices ultimately fell to below $11 an ounce two months later.''

The question is, Are you prepared if it happens again? What conditions, if any, could send silver on a spike like that again?

Gold $8,500, silver $180 by 2017/18?

 

IMHO: No problem at all.

So that would be 19oz for an av UK home (assuming nominal prices stay same) and a GS ratio of 16:1.

Are you ?