Jake

Carlton, are you not tempted to trade gold for property there in the US? If not, then when ie ratio wise what are you gunning for? 50oz/home? Cheers, jake

I bought 10...

10 apartments in Hong Kong, after having sold one property in London, and in the interim - invested in gold shares

yes but I mean 4 for cash, no mortgage leverage. And you mentioned a few nights poor sleep along the way-I think. Jags are fast but shermans are safe®. Anyrate, I am in a clapped out old mini. But it is a car I was always fond of.

Yes, but what's the point? You make house buying decisions directly based on the relative relationship between the price of gold and houses?

 

You live in a tent and buy gold until the time is right? Which, for much of my lifetime, would have meant living in a tent all along.

 

The point I was trying to make was that, for the average person, the relationship between the price of gold and houses is of only academic interest. Interesting it may be, but not something the average person will ever be able to take into account.

 

If I had listened to the gold bugs when I sold to rent in 2003 - if I had had the nerve to put my STR fund into gold and wait (and wait, and wait) I would have doubled my money (I guess, I haven't checked the numbers ... all I know is that gold has gone up a lot lately). But I didn't. I waited 7 years in rented accommodation and bought back into the property market.

 

The only thing that stopped things being a bit of a disaster is that in the first few years the interest on my STR fund more than paid the rent so I saved some money up and, in the area I live, house prices now are about the same as they were in 2003 (the boom had pretty much happened here by 2003).

 

So, you know who not to come to for investment advice! I am willing to make predictions if asked to allow you to do the exact opposite and, no doubt, make money.

BAB, I think you talk a lot of 'common sense', which is... utterly useless. You remind me of my uncle, (RIP). The average person would do very well to look into the relationship between the price of gold and houses. Where you buy on the cycle can seriously damage your wealth prospects. What would you advise your own children? Not to bother looking? Surely not.

Living in a tent? WTH are you on? You only had to str and buy gold and be 4 times up. You could have bought 4 houses with your str fund. (please, check the numbers).

Yeah.

But the average homes is so much BIGGER.

It becomes a magnet for buying all sorts of consumer junk, that the homeowner doesn't really need.

 

Will people's standard of living improve or diminish if they live in smaller homes closer to the city, and wind up driving a good deal less?

 

I reckon it will improve, as people shift their aspirations to things like community, cooking better food, and growing organic vegetables in small "victory gardens".

I think the great downsizing has already started, (even in Japan). I was reading that by 2030-50 there will be more single dwelling households than family dwelling here. Go figure

But bigger houses don't 'have to' mean married to consumer junk. You could have a larger family (against the trend) or you could be an extended family (on the increase)/community of like minds etc etc. Or you might have a buisness going, or be a smallholding/farm.

I am sure the smaller walkable homes thing will gain traction (esp with YOUR oil forecasts), in fact it already is/aspirations are. But life may get difficult in (parts of) the cities.

Knowing what you want. This is a tricky one and a difficult act to balance.

BTW can you start a thread tracking US walkable community house prices. Are they buccking the trend? I expect so. I'd also be interested in seeing some of these 100 oz US homes. Where and what are they like?

I found an interesting Japan foreclosed/real estate link btw...but I wouldn't even go to Tokyo at the moment, let alone buy. But that's just me. They just felt the 6.4 quake yesterday. And I don't think that is near over. Plus radiation/contamination, food sources all from Tohoku, all contaminated. But you may see that as a buying opportunity, blood on the streets kind of thing.

All the best! J.

Very good info here and links. Chris Dillon is mentioned. How is he?

http://www.facebook.com/RealEstateJapan

what is the point of thinking of house prices in terms of gold?

 

 

All told, swapping gold bars for bricks, whether as investment or a place to live, hasn’t looked this attractive since the inflationary depression of 1981. US housing’s previous low came during the deflation of the Great Depression. Never mind that the average US home doubled in size inbetween, or swelled another 40% since. Because whichever flavor of depression we’ve got today, the immutable object of unchanging, unencumbered gold has once more whipped back to its pre-20th century value against the ever-changing, credit-reliant market of residential housing.

It’s almost as if the “long boom” of easy credit never happened. At bottom, the average US home cost the equivalent of some 71.5 ounces of gold in 1934. Forty-six years later, it fell below 77 ounces of gold. Today’s 103-ounce price tag isn’t rock-bottom yet. But compared to the top of a decade ago, it’s getting there.

There's a few points of thinking house prices in gold, dispassionate or not, I guess?

'cheap as chips' This sticks in my head, Van. Do you think so? I see the graph and if I was in the US I may start viewing properties. But equally likely is 2000 USD gold. Thus houses for around 80-85 ounces. I suppose once there at 2000 you'd be persuaded to move the goalposts again and listen to 5000USD (Schiffy) or 8500USD (Robin Griffiths). So av houses around 20 ounces. Cheap as chips? Now or then? Of course gold at 8000 USD doesnt mean your dollars will still be the same value as today...but maybe they would still buy you the same house. (ie no nominal change from today).

 

Any rate I am not in the US and wont be buying US property...but this is a useful exercise nevertheless.

I suppose we are now just under 100oz for the US and 168oz for the UK. Cheaper than yesterday's chips. I wonder how much they'll be by Christmas?

just been on cid and can't find any news of this yet

although it did happen last year

this year they have imposed a 10% handling charge

for silver for all countries outside Germany except UK

I assumed this was a way of getting round the limits issue

Try and order! Ask them why stuff can't be delivered and they'll explain.

I've started saying this too now. US houses are positively cheap as chips. The gold/house ratio suggests that offloading their Gold and buying real estate is getting a bargain.

 

I know there are good reasons why the Gold bull market should run further, but I see Gold is regularly making the front pages of the BBC now - surely signs than the market is overheating.

 

Even cheaper when you consider...

 

"US housing’s previous low came during the deflation of the Great Depression. Never mind that the average US home doubled in size in between, or swelled another 40% since"

'cheap as chips' This sticks in my head, Van. Do you think so? I see the graph and if I was in the US I may start viewing properties. But equally likely is 2000 USD gold. Thus houses for around 80-85 ounces. I suppose once there at 2000 you'd be persuaded to move the goalposts again and listen to 5000USD (Schiffy) or 8500USD (Robin Griffiths). So av houses around 20 ounces. Cheap as chips? Now or then? Of course gold at 8000 USD doesnt mean your dollars will still be the same value as today...but maybe they would still buy you the same house. (ie no nominal change from today).

Any rate I am not in the US and wont be buying US property...but this is a useful exercise nevertheless.

Anybody trying to uy from CID will have run into this. Capital controls.

For all other European countries, the EC has implemented limits for the sale of silver.

Unless you are trying to send to the UK or Germany, each country has 'limits'.

Sorry if this has been covered before.

http://gold.approximity.com/since1930/UK_House_Prices_in_Gold_LOG_GUESS.png

I think I'm going to stick with GF's pretty picture.

BTW comparing AV.US Houses/gold and AV. UK houses/gold is a real pisser. Also the 'average' UK house @168k is basically crap, probably not where you want it, blah blah blah..

''Since the housing bust began, the average U.S. home has lost better than 70% of its value in gold. It’s dropped nearly 80% since the gold-market found its own floor back in the early spring of 2001.''

But not at 'rock bottom prices just yet'. This despite house sizes doubling.

71oz in 1934, 77 in 1980, and in 2011, 103oz. Definately viewing time and low offers for the US. Wish it was so for the UK. Will it ever be...? I suppose we are 73% off in gold in the UK and bugger all nominal discount.

Does it look good to be buying a house now though? Mybe gold has a while to run.

Just as an aside ... how long does someone have to wait before a prediction becomes out of date? In the sense that ... I'm sure you've all heard of Bill Bonner and his various missives ... he has been saying for many, many years that gold would go up and property would go down and the world was heading to hell on a debt handcart. Maybe I have been receiving emails from his various outlets for what - 10 years? So, was he right all along or was it just inevitable he would be right one day.

 

When I STRed in 2003 - if I had followed his general thinking and put my fund in gold - I guess it would have doubled. As it was I waited 7 years and bought back in to property. Oh me of little faith eh?

Looks like BB has been right all along. Gold, trade of the decade and all that. Surely if you had lisened to him you would have quadrupled your funds, at least. 2003 gold was about 200/oz. Ok so house prices continued for a while.

I still wonder if BB is right on the next trade of the decade-Japan? I suppose he is betting that Japan comes out of her K winter. Still a ways to go yet. But the lows were Nikkei 7-8000 odd. So far...I wonder if Bonner moved out of gold or is just having a punt with his profits? Somehow I doubt he has gone cold on gold.

i'm looking to sell some of my silver - i have 80oz in 4 very ulgy poured bars - and am wondering if anybody has any thoughts as to where would be the best place to sell them?

ebay is a possibility but i don't know how much interest these ugly bars will get (they don't have a makers stamp on, only the weight and purity - although i did get them from a dealer so i am 100% positive they are silver).

some of the 'we buy silver' places are giving pretty poor prices.

any other options?

cheers

I would take them back to the dealer where you bought them, if possible. You'll skip out on having to have them assayed that way. Did you keep the receipt?

Good Luck!

Failing that I would just keep them as paper weights/flower presses. I have a couple like that and I heard the shop where I got them has been 'washed away' in the tsunami Oh dear!

If I was in the US I think I would be looking at one of those nice walkable community houses, maybe.

http://gold.approximity.com/since1971/Gold_JPY.html

Why is JPY the odd currency out? Every currency I know is at all time highs but the Yen. Guess I just keep on keeping on. GF do you have a inflation adjusted chart for Gold in Yen?

GF's graph lines... If houseprices in gold go the way of your GS ratio lines all it would take is a doubling of gold here, regardless of nominal prices.

My own feeling is for a slight move down-at least-in nominal and continued move up with gold. Target of 80-120 oz for the average UK house. With gold at about GBP 1000/per oz, at least the calculation is easy!

from drbubb's diary

’’It could go up it could go down. It's a coin toss'

The profundity of the heavenly bodies and the full moon, which is, at least, very beautiful tonight.

I have listened long and hard to Larry but I have to say that, on balance, I think he talks a load of crock. But very nicely..and hedging his bets.

Verdict: bit of a shill.

Likewise I loaded up on Tuesday as it approached the 144 day MA. Was hoping to get it lower but satisfied so far. If it goes to 1.4 or 1.5 times the MA we would be talking about a $48 or $50 target. We might get this on the back of QE3 speculation but downside risks will hopefully stop at this MA so feels like a safeish punt. Famous last words with silver

Yep, who knows? Just keep on keeping on. Nice Jim Dines interview on KWN. With targets like 200-300 for silver, surely the best policy is to just try and stay at the crease picking up the runs? Ditto gold. They seem to be taking it in turns like cyclists at the tour de france. At these prices platinum even looks interesting. Bloody distractions...

Hey GF,

Do you have an inflation adjusted chart for gold in JPY on approximity? Thanks!

Jake.

Just found this snippet

Yen gold is likely to rise above its nominal high of 200,000 yen seen over 31 years ago on January 18th, 1980. In the longer term, the inflation adjusted high of over ¥500,000/oz is quite possible given Japan’s dreadful fiscal and monetary position.

From here,

http://www.resourceinvestor.com/news/2011/5/pages/japan-economy-contracts--gold-in-yen-consolidates-.aspx

more tidbits here,

Most Wall Street and City of London analysts have completely underestimated the risk posed by the Japanese natural disasters and deepening nuclear crisis. Thus, the risk of a return to recession and even depression in Japan is completely underestimated.

Japan, like most of the western world, is massively indebted with Japan's government debt-to-GDP ratio projected to top 200% this year, the heaviest in the industrialized world. Greek’s debt load is set to rise to 160% of GDP growth next year which is close to the levels seen in Zimbabwe which recently experienced hyperinflation.

Complacent analysts reassure that unlike Greece and Zimbabwe, much of Japan’s debt is held by domestic savers and the belief is that they are unlikely to sell their yen paper assets.

This assumption is highly questionable as in the event of inflation deepening and the yen continuing to fall on international markets, Japanese savers are likely to diversify out of yen denominated bonds and cash.

Massive public debt in Japan, in conjunction with very poor demographics and a shrinking population mean that Japan is increasingly vulnerable to a sovereign debt and or currency crisis.

The “past performance” of Japan’s deflation of recent years may not be indicative of future performance.

The current and continuing response of the Japanese authorities is the printing of trillions and trillions of more yen and further fiscal and monetary profligacy.

Thus, Japan looks likely to be entering a period of much higher inflation. This creates the real risk of virulent stagflation and even of hyperinflation in the coming years.

Say a prayer for me!

Hey GF,

Do you have an inflation adjusted chart for gold in JPY on approximity? Thanks!

Jake.

ARRRG ! It feels painful buying at these prices. Britannias at Bairds are now over £1000 each !!!

Buggers used to be little over 200 a few years ago.

Damn deflation! Or whatever you call it.

It's a difference really in philosophy/culture/morality isn't it? Eastern cultures have Confucianism and the Tao as the 'way'. The West has Christian philosophy which is by and large dead or by now disbelieved in by the great many.

Maybe the West has come to the end of the road not only financially but also morally and culturally. I can't see Britain doing a 'Hong Kong' or Japan/Korea. As JD said we tried it once in Dickens' day.

Wouldn't you say it is a little short sighted to stereotype all behaviour or single parent's kids as potential scum and drug dealers? There are plenty of rich lawyers/bankers still enjoying after dinner cocaine, happy with the status quo. Less so in HK, I'd dare say. This is a reflection of the underlying morality/philosophy which keeps society on the straight and narrow...But straight and narrow it is and lacking in creativity or independence perhaps. HK shouldn't be compared to Kilmarnock IMHO. Let's see if you'd prefer to live in London or HK-more of a useful contrast. Better still ask a Hong Kong born Chinese. I am sure with a bit of digging you could find an underclass of sweatshop workers in HK with zero chance ever of owning their own place etc...in fact only forever will they be rental slaves locked into a society by a morality/philosophy which will keep them in their station for their whole lives, without much chance of upward social mobility.

Is the goal of life simply financial rewards for being a hard working goody goody?

A quick update on the London housing market

 

Since April 2011 the market has gone quiet in the volume of instructions received. I must add that I am at the coal face and tend to get the cream of all instuctions.

 

The remortgage market is getting stronger with applications applying for either 2 year fixes or tracker rates though it must be said the applicants are 60-75%LTV (Loan to value)

 

An intersting trend is 75% of those sales I deal with are for BTL (Buy to let). This market suggests cash rich buyers are geting out of sterling.

 

It is only an opinion of mine that I consider a sell off (the money markets that is), over the summer with a very short deflationary period about to set in. Gold silver will go down as well as all commodities. This is all contrived and to me is only a ruse, as the FUNDAMENTALS are only getting worse. Gold and silver will hold well.

 

Here is an antidotal tale. Today I did a remortgage valuation. The house was bought in 2005 at £485,000 at just shy of a 100% LTV. The same house today is worth £750,000 yet the applicant now owes £490,000. This is replicated all over.

 

At the end of the day most people waiting for a house price crash need to preserve their purchasing power. A significant nominal crash will NOT happen. So far against gold they have crashed spectacular. One should have sold out in 2008 and converted their £ savings and bought gold. Did you know Prime London for a house over £2milion has gone up 57% since 2008. Compare this agaisnt golds rise since 2008 and you will calculate a huge drop against Gold.

 

I do not see this position changing even if you are late to the party in buying gold today.

 

There is an old Biblical saying 7 years good 7 years bad. With Uk debt long dated I can see a few years hardship up to 2013/2014 just before the next general election were alot of money will be injected into the market to create the feel good factor. From 2015 onwards housing in the UK set against gold will be the sweet spot. The UK housing crash is not in nominal terms in sterling but against inflation and gold.

 

My point is get out of sterling even now and buy and hold gold. The cycle will eventually reward you and I will say in 2015. If I am wrong as the markets can stay irrational longer that you can stay solvent then I will hold my hands up and say get on with you life as you only live once. But i am confident that I will not be wrong as I have put my money were mouth is and hold no sterling any more. Yes I am waiting to buy.. The value of a house in sterling is irrelevant. It is the amount of gold ounces is the measure. From now till 2015 housing values in gold onces will go down. My only regret is I never listened to my gut instinct and bought all the gold I could aford in 2008. I would be a content man now.

Thanks for that CS. So you would buy gold over the summer, averaging in, I suppose? Looking to hold until when? 2015? Then use gold to buy property? The property crash against gold prices must be around 70+% now. I'm wondering if it would not be opportune to buy property (for those in the UK) now with gold before prices retreat? But you think this will only be temporary.

Ummm...Why do you think no NOMINAL crash?

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2011/5/10_Richard_Russell_-_Expect_Huge_Rebound_in_Silver.html

There seems to be a lot of fuss about silvers fall of 30% wiping out a month or so of gains. Big deal. I missed the opportunity to play the G/S ratio after watching it like a hawk come to a kilo to an ounce and was too slow to respond. (well done GF btw-great guns). I didn't make the same mistake in helping myself to handfuls more though despite higher premiums for silver and gold (physical).

But credit to people like Richard Russell/David Morgan and others on KWN/ZH for their knowledge from years past about this bull market. A learning experience. Is it over for silver? Who knows? I'd welcome some more downside tbh. Nothing has changed really except I've got a little more. Sure it could have been a lot more if I had played my cards right. But no worries. If it goes down again, I'll pick up some more till the game changes significantly.

Hats off to you though, GF. You played a perfect hand. AND had a holiday. Bugger!

And mostly into gold, which has also performed well since then, and I half expect the price to be "stickier". A trade missed with silver/ gold, or silver/ dollar but there's always another. I'll continue to play the devils advocate [against myself] with the volatility in silver.... in order to hedge gold.

So you'll pass on the kimchee with becq sauce? Kim Yu Na.