modigliani1

Oh yes, annecdotals say a massive oversupply of properties about to hit the market.

 

Bank of Mum and Dad seems to be generally out of funds.

Friend (one of those people who think property can only go up) is looking for a flat to buy in London. He takes interest in a new development being built in a nice area with plenty of tall buildings, and asks the agent.

The agent tells him she does not know when the development will be completed cos the bank does not want to lend.

Friend comes to me in utter disbelief and I chuckle ^^

Just wait for the general election to pass.

Discussion being aired on Bloomberg right now, basically everyone says gold has a long way to go.

My point was that you appeared dismissive of people who did not trust the seller saying no brains were needed

 

I felt it was fairly natural when it comes to money that people would not trust another - rather they want to verify things.

But those people did not want to verify things, that was their biggest mistake.

Anyway, sorry for derailing the thread a little bit

Obviously coin shops are liberally scattered around where you are, the nearest to me is Harrods now i suppose, at about 25 miles it would only be a 6 or 7 hour walk each way. As for regular jewellers, it's a possibility but even then, I don't know if I'd place much credence in the opinions of the shopgirl in H Samuel or Elizabeth Duke.

Uh, I suppose there is a high density of coin shops where I live then. I can think of three within a 15 minutes drive from my house in Italy and a few in London too.

So you think somebody would give you 1100 dollars of gold while they wait outside and you go inside a shop?

 

Or if somebody was near a coin shop trying to sell coins for much less than the apparent value they would not be working in cahoots with the coin shop owner for sure so it would require no brains to know that was the case?

 

You seem to think people will trust you and you seem to trust others

Well it's up to him, of course. If he is willing to make the deal, he will wait. If he isn't even after I offer to pay twice as much, probably either he is not so desperate or he is a scammer.

If he wants to sell the coin for $50, then he doesn't know its real value. If he doesn't know its real value, he won't be concerned with me going inside a shop and have it checked. If what you are saying is that I should not trust the coin shop owner, I thought it's pretty obvious that I'd sell the coin straight away, go out and pay the guy his $100. I can't see any serious risk in this approach.

As for your comment, I find it pretty funny for a very personal reason: pretty much everyone close to me points out how hard it is to gain my trust

Which is both a compliment and a criticism, no?

I don't think it showed much, other than people are wary of being scammed and ridiculed. I doubt the response would have been much different if he'd been offering anything else worth $1000 for $50. I would be deeply suspicious if someone came up to me offering a deal like that.

I would ask him to come with me to the nearest coin shop, ask him to wait outside and have it checked. If he does not want to go through that, you tell him you'll give him $100 instead of $50 if the coin turns out to be genuine. Seems like a no brainer to me

In posting Roubini's interview, my intention was not to suggest he was necessarily right. But I find it wise to gather as many views as possible, regardless of whether I agree with them or not. The more perspectives, the better no?

Roubini might be right or might be wrong. I personally remain fairly bullish on precious metals in the near future (although I do expect to see a correction in Dec or perhaps early Jan...but of course, I'd be happy to be wrong).

Roubini's view from seekingalpha. He believes gold (and other commodities) are due for a correction:

Crigger: Switching gears, you've said that gold is only useful as an investment in situations of hyperinflation and catastrophic deflation. But what do you think about other precious metals with industrial applications, such as silver and platinum?

 

Roubini: Precious metals prices are going to depend on supply conditions compared to demand. There is a global economic recovery, and that implies that demand is rising. But like I said, this isn't totally justified by the fundamentals of supply and demand, but also a wall of liquidity chasing assets, less risk aversion, and this massive "mother of all carry trades" that uses the U.S. dollar as a funding currency.

 

So in my view, some of the increase—even in precious metals—is not justified by fundamentals. The supply looks excessive, and it looks like part of a bubble, a generalized bubble we see across the world.

 

Crigger: But does gold still have a role to play in currency, either as a de facto or literal currency standard?

 

Roubini: Well, the central banks are diversifying their foreign reserves, and that's increasing their demand for gold. China's doing it; India's doing it; others are doing it. Gold is going higher in part because of this central bank diversification, and in part because, of course, whenever the dollar weakens, we see an inverse relation within the dollar price of commodities, including gold.

 

But if you ask me, can gold can go towards $1,300, $1,400, $1,500 or $2,000, like many gold bugs say? Well, there's only two scenarios in which that could happen. First would be a real increase in global inflation, and we don't see that right now. In most emerging markets and advanced economies there is actual deflation, because there's glut of supply rather than demand, workers have no pricing power and they cut wages. So in a situation where there's deflation rather than inflation, why would gold be staying high? It cannot be. It can go up above or below $1,000, but it's going to move around those levels, and it's not going to break toward $1,500.

 

The other scenario is Armageddon, another depression, where everybody would buy canned food, guns, ammunition and gold bars and run to a cabin in the mountains. That was the risk after Lehman, but that risk has been severely reduced.

 

So we don't have Armageddon; we don't have inflation, so gold can maybe go slightly higher. But those people who delude themselves that gold can go to $1,500 or $2,000 are just talking nonsense. The fundamentals are not justified, and those people are just talking their books.

http://seekingalpha.com/article/171919-rou...or-a-correction

+1.

 

Where's Miller, by the way?

He's always with me

"....The low rates are ruining the future of the pound, and the UK economy. They cannot be

sustained forever......"

 

This is a point with which I'm struggling at the moment.

 

Firstly, if all currencies currently have low rates and are likely to continue to do so indefinitely, how do UK low rates ruin the future of the pound and the UK economy?

 

Secondly, as long as deflationary forces are at work (e.g. over-capacity, lack of demand, high unemployment) interest rates can presumably stay at the low levels, no? I think these forces are going to stick around for quite some time.

 

Thirdly, there is often talk about the bond market rather than the BoE pushing up rates. But equally there are guys like Hugh Hendry who refer to this fear as the 'bogey man'. He thinks there will be plenty of demand for the bonds - we have an immediate precedent in Japan.

 

In other words, will the UK not be able to hold its rates at these low levels for the next 2-3 years without risk to the pound? And will this not support house prices?

All your points are valid. Yes, they might sustain the pound and house prices for some time (months, even years).

But in the end these policies are just postponing the inevitable and might very well end up making the problems that the UK economy is facing even deeper. I strongly believe the UK would be better off taking the sour pill asap. But it would be politically unpopular so obviously it won't happen.

Ask yourself: what would have happened to house prices if the govt hadn't slashed the rates? Prices would have kept dropping. They weren't allowed to. Now, as DrBubb pointed out, the market is experiencing a rally based on absolutely artificial and unsustainable circumstances. When this whole ficitional environment vanishes, we are gonna see the real extent of the current crisis.