Kapouillax

Even Bubb has given in now and is bullish.

As far as I understand, he's been long term bullish all along, but worrying about the short term outlook and risk, something most of us don't care (much) about.

Until next time...

Nice hearing from you again

Had the tenancy laws been different in the UK, and we could have decorated and altered gardens etc as we wished, who knows? I'm sure there is a good chance that we would still be renting.

I can only agree on that statement.

Thats only 27k or so.

Pocket money

I assume you're UK based, in which case there's no better argument for owning [either|both] Britannia [gold|silver] or Sovereign coins, as both are CGT exempt.

Warpig, great info, thanks.

Is there an "official" place where I could check that info; in fact, I'd like to know if owning bullion, through online bullions vaults or the actual physical thing is also CGT exempt. I keep seeing contradictory statements on that matter, which is annoying. Thanks!

Depends if you are looking for an investment or a home

Of course! Depends as well on how much you trust the fact that you'll be able to pay your mortgage without having to move home (that's my main problem, especially since it will mean my golden mattress will shrink almost to nothing in the process )

Now is not the time to be overstretching yourself to get onto the housing ladder/snake, but if you are in the fortunate position that you can afford to buy a nice place to live and not over-extend yourself then it is certainly a good time to be choosing this option and then to be making overpayments on your loan to insulate yourself somewhat from a shock event that force borrowing rates higher, and ultimately cut many years off your mortgage.

Yes, it's a calculation of how much you want to lose in renting over how much you want to lose in property price.

At least you KNOW how much you are going to lose with renting

I'm also looking for a property now (even placed a -rejected- offer today:)) and, interestingly, have been through exactly the same thought process as he has and coming to the same conclusions.

To be fair to DB he has made some very good calls on market moves but also he has made some poor ones I think it is down to personal peference and available free time and your point of view of risk of etf over held , there is no right and wrong on the matter!

Yes! All of us are right! For different reasons. And with different goals. Okay, let's move on

By trying to Beat B&H? That would only bother a cultist, I reckon. Why shouldnt a normal reasonable person what to watch my trading and see how I get on. They might even learn something useful about market timing if they see me getting it right, as I did.

No no, I was just referring to the temporary "beating the crap out of...". Surely that would tickle a bit B&Hers?? (Edit: even non-hardcore ones)

"People take offense at the "evil trader" who uses the corrupted system."

 

I am not taking offense, since you may not mean that. But a sentence like that is straight from the Gold B&H cult paybook, don't you think?

Hence my quotes

0% chance of getting trapped in a paper trade when the system blows up, your methodology doesn't offer that guarantee, you're part of the system we opted out of.

You're being unfair, warpig. Whatever Bubb may in essence say, is to be prepared. The "method" is just not to put all your eggs in the same basket.

As far as I know, the current paper trading system didn't blow up and is not 100% guaranteed to.

As far as I know, the gold isn't 100% sure of losing its intrinsic value wrt fiat money.

We may see either, or a range of possibility in between.

I think owning physical and paper counterparts to hedge their value *in case* doesn't mean you sell all your physical (in fact it's up to you as to how much you want to retain). And it could mean you can get more physical as you build up. And either way it goes, you can retain some of the benefit. But that's just my view, and I think DrBubb to have opened my mind to these tools.

By going 100% one direction, you take a gamble. You may be right. Or not.

DrBubb warns you take risks.

People take offense at the "evil trader" who uses the corrupted system.

DrBubb also sometimes gets a bit "enthusiastic" and provokes (cf. renaming beating buy and hold thread)

DrBubb also has a view that could be disconnected from our realities. In fact, we all have a different experience of life and have different needs. Pure B&H for some, pure trading for others, and a mix of those to those who think it makes sense....

First, I would familiarise myself with the Tax policies.

Indeed, in your situation owning GLD certainly is better than owning physical, but, for instance, in mine as a UK resident, physical is a better option (at least, in the perspective of owning it long term...)

Buy GBS perhaps in LSE ?

Thanks Neel, that looks very interesting!

Edit: thanks to your pointer, I've also found those:

- PHGP

- PHSP

 

From 5 years ago to today, people have done better holding GLD than physicals, for two reasons:

 

In UK at least, physical gold ownership seems to me like more tax efficient.

Also, holding GLD when you live in GBP means you're depending on the USD <=> GBP exchange.

That's why I "hold" physical in GM and BV.

But, probably there are a lot of things I don't know about, so what would you do, DrBubb, if you wanted to hold gold but were living in GBP?

I know things are regional - but those charts on HPC just don't relate to my experience of the world.

 

Prices in Guilford over last 11 years

 

Their graphs tie in pretty much with my experience of the market both in Surrey, Berkshire and the West Country

I wish my area was going down like GU1 does : Prices in Fleet.

(allegedly, they started much higher and the soufflé is deflating to normalise)

You can get good 5yr fixed deals for around 4% if you can get the 25%-30% deposit together. That's cheaper than renting in most places. Make overpayments while on this cheap rate, and at the end of the fixed period, if prices have fallen (nominally) then trading up will be easier and cheaper, and if they have risen then you will have a big equity cushion and be able to remortgage for a good rate again.

 

Of course this requires that you can put down a large deposit in the first place...

 

IMO the best thing that house prices can do is to remain level in nominal terms; I don't want them falling much as this will just kill the economy (better to have expensive houses and jobs, rather than cheap houses and no jobs), and more expensive houses are not desirable either and put them further out of reach of everyone. At that rate houses should fall back to long term trend in 3-4 years.

Yes. 25%-30% would be pretty much all my savings in, hence why I'm hesitating.

This comment makes me think you've pretty much made up your mind on what to do, you can't beat having a financial cushion.

 

I'm sure I've seen some 90% LTV loans fixed for 5 years. I was initially looking at 10 year fixed loans at 75% LTV, but decided that I'd rather hold onto more of my PM's than worry about where we will be a decade from now.

 

JL

You're right JL, that's my line of thinking.

I'm also thinking about how much interest rates are likely to raise in the next 5 years... Perhaps enormously, but then that means inflation has kicked in and the PM pot will help probably more in that situation than a fixed interest rate mortgage...

The political will is to favour assets in detriment of savings, regardless of the cost. Let's not disappoint them, then, and have the largest safety net possible in case the rulers' strategy didn't quite work out as expected (which is to be expected )

SWMBO hehe, haven't heard that for a few years (Authur Daily I think?)

 

I went for option A, with a long term fix.

 

Yes, unfortunately I can't do both

If I go for a long term fixed, the deposit would engulf all my savings... in an asset that's got a strong risk of depreciation (be it nominal or through inflation)... Mmmmh!

Oh and Dr. B, your recent favourite Rightmove has a report out today too

 

 

 

http://www.rightmove.co.uk/news/files/2012/01/january-2012.pdf

 

I'm going out on a limb here, but I'm guessing you won't be posting this one on several different threads, as you did with one of their previous ones are you?

 

 

(Told you rightmove can't be trusted )

It sounds that indeed sellers in nice areas can afford to hold on to their properties. And they probably will for a long time as long as interest rates will keep down, which sounds likely to hold for a few years.

So, house prices will keep their nominal values : what is going to give then? That's the question I have to be asking myself. as I will soon be "forced" to buy by SWMBO.

I can see two radically opposed strategies:

- Put the smallest deposit I possibly can and ride on inflation through acquisition of inflating assets and benefit from low interest rates as long as they last.

- Go all in, losing pretty much all my financial cushion in a big deposit, but get a 10 years fixed rate mortgage which will allow us to be shielded against sudden surges in IR.

In both case, buying a property worse than what I can afford to rent.

Lose/lose situation each with their own risks

I'm not ready to move to a rural community and learn farming just yet!

No need to : http://our.windowfarms.org/

(Ok, you may not quite be self sufficient from that )

Edit : Found that also, which is possibly more useful : http://opensourceecology.org/wiki/Hydroponics

the crazier the theory the less evidence some people seem to require to believe it, its moronic.

Well, there's a twist.

The essence of those "theories" is that they are, by definition not verifiable by their intricate secrecy:

- Mysterious and super powerful secret societies that control the world so well nobody can possibly know about them.

- Covert ops operations of nation X to support event Y. (CIA blowing up the twin towers)

- Shy fairies that will hide if there's any chance for them to be spotted.

(No, I will not make any mention of religion )

Do you have any factual evidence against the existence of invisible fairies? I don't!

That's how we live at the moment. Gives you room to think.

And store the bullions!

http://en.wikipedia.org/wiki/Haussmann's_renovation_of_Paris

I lived in one of those during all my childhood/young adulthood. 4m (okay, 3.7m) high ceilings! Certainly felt better than the average British new build

Yeah, I get the idea of an "Insurance Fund".

I thought you'd do

I'm merely just putting things into balance. I think you guys are all (mostly) right in your own way, and have different goals.

I had this conversation with Dominic not many days ago. He was concerned that I did not hold enough Gold, to get me through the Hard Times that are ahead. And I wondered what is the right amount: 3 months, 12 months, 10 years of expenditures?

And then after that: Who are your neighbors and how well off are they. If they are all starving and hungry, then holding vast amounts of gold may simply INCREASE the risk to your personal safety and to that of your neighbors.

All bets are off as to what happens if the whole system collapses.

I don't physically hold my physical gold/silver and let GM/BV do the risky work for me. I understand there are risks with that as well.

I have some cash, in various currencies, in different countries, as well.

I don't own a house (yet... resisting as long as I can my wife's constant pressure), so I can move (and probably will).

There's certainly more I can do, I'm sure. I can certainly spend my whole life planning survival strategies.

In the meantime, I'll try to implement various strategies with your guidance, DrBubb, and others' on this forum.

I have to reiterate how grateful I am for the advice, by the way.

Kap, my gold is my house fund and on that basis I buy with a 5-year horizon. Do you think it's worth hedging with such a timescale in mind or would you prefer a disciplined accumulation approach (buying weakness)?

 

I'm just interested in what your view of medium-term is and your perspective in general.

Take this with a pinch of salt as I clearly don't claim to be an expert, but:

- Short term timescale : in the next weeks, after the Euro zone finds a (temporary) resolve. I'm hoping for a nice big chunk of money print... Well, hoping, and not. Hoping for the immediate sake of Gold's price, not hoping for the actual medium term (economic) consequences.

- Medium term timescale : in the next year to 2 years. Depending on what will be decided in the next days/weeks, what will happen? I expect, if more printing, we'll have another big bounce for Au (and Ag), possibly leading to the final exponential blowout. Otherwise, I expect we'll have a strong(er) risk of entering a bear market for gold (so I'll be watching out for that and change my investing strategy...).

- Long term, is 20-30 years time, who knows, but I expect Au will have appreciated. That said, earth might be a barren rock by then, so we'd have maybe other things to worry about

But for the timescale you consider (5 years), I have the vague intuition that the actual price of Au at that time will be down from where we are now (re: my medium term view).

Now, that's considering we somehow keep the current economic system we have now, hence why I also have a safeguarding proportion of physical Au that I try to grow.

So that's why I've split up my pool of money, attributing the proportions of each to the chance I see scenario X happening.

25%? I am not sure what you mean? (The drop on GLD, I suppose)

For SLV, at $30, the drop from $50 is 40%. At $25, it would be half.

That's not a trivial opportunity loss.

 

Also, some like Bob Chapman may have GIVEN UP ALL THEIR SILVER PROFITS, it the price falls as low as $18-25. Frankly, that is not a great move, and I hope you can see why.

 

What's the point in seeing a price double, and then watching it fall back and wipe out ALL of one's gains? That is not something to be complacent about, and would suggest that there are better ways of managing ones wealth.

 

People need to be more honest with themselves, more disciplined, and maybe willing to learn some new techniques.

 

You can go to other sites where they will tell you how to stay happy with huge opportunity losses like that. But I put myself in the place of others, and reckon that GEI offers something different: Consistent honesty and integrity : To help others learn the techniques which will help them master the challenges of managing wealth and thriving in what JHK calls a "Long eMergency."

Actually I was hypothesing the (probably impossible) loss to physical gold down to, say, 500$... Some long term B&H might still be in the money...

I completely agree with you about how crazy one would be to see one's profit disappear without acting, but I was just pointing out that it might not matter so much to some long term b&h'ers who may also view it purely as an "insurance fund" for if/when the financial system collapses.

I suppose that, it depends also on what use you have of it. In your case, it's your main source of income (trading, in general, i'm assuming), for others, it's a lump of money they save "in case the excrements hit the propeller". I can understand both views. I'm personally sitting in-between as I have some medium term goals for the money (so, I have to maximise its value), but I also want to keep a proportion of physical as core holding.

I don't see both views as mutually exclusive, and, in fact, I split my holdings in two chunks, one purely B&H, and the other where I try to follow your "beating B&H" advice strategy (or, at least, a UK-tax-and-currency-friendly proxy equivalent).

(going 100% certain 100% hardcore B&H sound crazy to me, but who am I to know )