Jump to content

Recommended Posts

If anyone doubts that we face massive inflation in the not to distant future they should listen to Eric King's interview of economist Dr. Anna Schwartz on FSN this weekend.

 

A very interesting interview.

 

http://www.netcastdaily.com/broadcast/fsn2009-0509-3a.mp3

Share this post


Link to post
Share on other sites
If anyone doubts that we face massive inflation in the not to distant future they should listen to Eric King's interview of economist Dr. Anna Schwartz on FSN this weekend.

 

A very interesting interview.

 

http://www.netcastdaily.com/broadcast/fsn2009-0509-3a.mp3

I doubt whether anyone doubts some kind of eventual price inflation is coming. It is the timing of it and what happens in the meantime which is of interest.

 

Agree that it was an interesting interview.

Share this post


Link to post
Share on other sites
I doubt whether anyone doubts some kind of eventual inflation is coming. It is the timing of it and what happens in the meantime which is of interest.

I think you are playing a very dangerous game in trying to "time" the break out in inflation. The inverse head and shoulders pattern, which is developing in gold currently, looks to be targeting a break out in gold above $1000 for mid June, which also coincides with Martin Armstrong's change dates.

 

I sure wouldn't want to be holding paper come mid June. Good luck!

 

 

Share this post


Link to post
Share on other sites
I think you are playing a very dangerous game in trying to "time" the break out in inflation. The inverse head and shoulders pattern, which is developing in gold currently, looks to be targeting a break out in gold above $1000 for mid June, which also coincides with Martin Armstrong's change dates.

 

I sure wouldn't want to be holding paper come mid June. Good luck!

If you are already 50% in metal then you can afford to play this game. Actually, you should as you are then hedged either way with both cash and metal. There are no certainties, rather there is always the possibility of being wrong. Already with a large position in gold and silver, you cover yourself by buying metal with the other half of your funds at bargain basement levels in case deflation wins the day. This way, if ...gasp, shock, horror... gold does not go to the moon, you have still bought a monetary asset at a good price. Even so, I think in a hyper deflation, gold and silver will perform as currencies doubling from here as other currencies half.

 

If you do not get the hoped for bargain prices - with gold and silver going one way upwards - this is no great disaster as you already have 50% of your worth in metal.

 

Are you 100% in metal?

Share this post


Link to post
Share on other sites
Are you 100% in metal?

100% of my liquid cash is stored in G&S for the long term. I do run my own business which owns a commercial property which I operate out of, so can't say that 100% of my wealth is in metal.

 

I also have a smaller portion of my wealth in an ISA which I trade shares with, mainly gold, silver and oil related. I do not have a large stash of paper sat in an account or bond somewhere.

 

So you could say I am firmly in the same camp as Goldfinger and CGNAO (come back soon, we miss you).

 

 

Share this post


Link to post
Share on other sites

I visited casle Drogo today which was built 1910 to 1920, during the gold standard. The price was £175,000 including the land. 175,000 gold sovereigns @ 7.32grams=1281kg (1.281 tons) of gold which is around £25,000,000 in todays fiat, or £8,300,000 when gold was cheaper in 2000. Its a spectacularly huge granite castle on a large plot. I ask myself, is £25,000,000 cheap for such a property? Is it fair to compare the value of gold durring the time it was viewed as real money to the present time when only a few do?

 

http://www.nationaltrust.org.uk/main/w-vh/.../w-castledrogo/

 

http://en.wikipedia.org/wiki/Castle_Drogo

 

sfr,pa...:)

 

 

 

Share this post


Link to post
Share on other sites
I visited casle Drogo today which was built 1910 to 1920, during the gold standard. The price was £175,000 including the land. 175,000 gold sovereigns @ 7.32grams=1281kg (1.281 tons) of gold which is around £25,000,000 in todays fiat, or £8,300,000 when gold was cheaper in 2000.

In last week's "Cranford," set in 1843, one character receives a £5 note as an inheritance. He goes to a dress shop to buy a shawl for his girlfriend but the shopkeeper tells him the issuing bank is about to fail. Judi Dench's character hears this and, as her wealth is entirely in that bank, doesn't want it to be true. As if it will make a difference, she gives the man 5 sovereigns for his note.

 

5 sovereigns = £750. Would you take a £750 note to a small town shop and expect them to have change for a shawl? Would you carry £750, possibly more, on your person just on the off-chance you'll need it?

 

I'm not sure if this exchange was in the original book or created by a modern screenwriter wanting to make a link to the credit crunch but who didn't know the value of gold!

 

Edit: allowing for price reductions due to technological advances over the last 166 years, a 0.5% annual reduction equates to a factor of 0.44, 1% to 0.19. So with 1% "price deflation" £750 today would be worth £142.50 in 1843.

Share this post


Link to post
Share on other sites
In last week's "Cranford," set in 1843, one character receives a £5 note as an inheritance. He goes to a dress shop to buy a shawl for his girlfriend but the shopkeeper tells him the issuing bank is about to fail. Judi Dench's character hears this and, as her wealth is entirely in that bank, doesn't want it to be true. As if it will make a difference, she gives the man 5 sovereigns for his note.

 

5 sovereigns = £750. Would you take a £750 note to a small town shop and expect them to have change for a shawl? Would you carry £750, possibly more, on your person just on the off-chance you'll need it?

 

I'm not sure if this exchange was in the original book or created by a modern screenwriter wanting to make a link to the credit crunch but who didn't know the value of gold!

 

Edit: allowing for price reductions due to technological advances over the last 166 years, a 0.5% annual reduction equates to a factor of 0.44, 1% to 0.19. So with 1% "price deflation" £750 today would be worth £142.50 in 1843.

I think that 5 sovereigns would have been worth allot more back then. £750 is the typical wage a carpenter looks to earn a week now but back then I think he would be lucky to earn one, or 20 shillings which is about 4 ounces of silver.

 

So she would be carrying the equivelent of £3000 or more to buy a dress. Sounds like my wife.....

 

If I have this wrong Id like to be corrected by someone with a knowledge of wages pre 1914.

 

BTW, any one notice how half sovereigns often sell for less than 50% of a full sovereign on ebay??

Share this post


Link to post
Share on other sites
IHS-GOLD.jpg

Share this post


Link to post
Share on other sites

 

Something I've been meaning to analyse is a UK House Price in Gold 'Offest' - the idea here is that you buy your house at the absolute bottom using the smallest deposit possible and hang on to your gold positions as both houses and gold rise in value.

 

 

Let's look at what happened last time when gold was in a bull market:

 

Gold averaged $675 in January 1980 when gold hit it's 1-day peak of $850 - converting this 'achievable' average gold price of $675 in January 1980 back into pounds using the following tables found below:

 

http://research.stlouisfed.org/fred2/data/EXUSUK.txt

 

This gives an exchange rate of 2.2641 for that month which gave an achievable gold price of £298 for those in the UK in January 1980.

 

 

The Nationwide data says that the average UK house price in Q1 1980 was £22,677

 

(House prices again peaked at around the time that gold peaked after a mini-boom that started in Q2 1977 - this is what you see on the Natiowide graph and it came after the 1973 peak in house prices due to to negative real interest rates and was followed by another recession in 1981)

 

 

So to recap, back in January 1980:

 

Average house price was £22,677

Average gold price was £298

 

That means that the average house was 76.1oz of gold.

 

 

Here's the interesting bit :)

 

 

Had you bought where the average house was 76.1oz of gold, you would have been buying around the peak of the housing market :lol:

The late 70's mini-boom in house prices ended with a peak in Q4 1979 (just before gold peaked in January 1980) and prices fell in real terms for nearly 3 years until another bottom in Q2 1982.

 

The bottom of the housing market after the 1973 crash came in Q2 1977 where the average house was £12,689 - offsetting this house price bottom with the gold price peak just 2.5 years later in January 1980 would have meant the average house was only 42.6oz of gold. :)

 

As an example, lets say house prices bottom in real terms in Q2 2012 (could be even longer) and gold peaks about 2.5 years later in Q4 2014 - the best stratergy is to buy your house as near to the bottom as possible (as in Q2 1977, Q2 1982* and Q4 1995*) with the least money down if we've got decent inflation and hang on to as many gold positions as you can until the peak.

 

That might be when interest rates start rising and the housing market begins stalling once again - 2014 is just a projection I have but no-one knows how bad this is all going to get and how much inflation will be created. But buying a house as near to the bottom as you can has got to be the best thing you can do - no point waiting for gold to hit a peak before you buy as that will likely be a peak in housing as well!.

 

Catflap

 

(* at the 1982 and 1995 lows you would have put the least money down on a house and everything else into the stockmarket)

Share this post


Link to post
Share on other sites
Something I've been meaning to analyse is a UK House Price in Gold 'Offest' - the idea here is that you buy your house at the absolute bottom using the smallest deposit possible and hang on to your gold positions as both houses and gold rise in value.

 

 

Let's look at what happened last time when gold was in a bull market:

 

Gold averaged $675 in January 1980 when gold hit it's 1-day peak of $850 - converting this 'achievable' average gold price of $675 in January 1980 back into pounds using the following tables found below:

 

http://research.stlouisfed.org/fred2/data/EXUSUK.txt

 

This gives an exchange rate of 2.2641 for that month which gave an achievable gold price of £298 for those in the UK in January 1980.

 

 

The Nationwide data says that the average UK house price in Q1 1980 was £22,677

 

(House prices again peaked at around the time that gold peaked after a mini-boom that started in Q2 1977 - this is what you see on the Natiowide graph and it came after the 1973 peak in house prices due to to negative real interest rates and was followed by another recession in 1981)

 

 

So to recap, back in January 1980:

 

Average house price was £22,677

Average gold price was £298

 

That means that the average house was 76.1oz of gold.

 

 

Here's the interesting bit :)

 

 

Had you bought where the average house was 76.1oz of gold, you would have been buying around the peak of the housing market :lol:

The late 70's mini-boom in house prices ended with a peak in Q4 1979 (just before gold peaked in January 1980) and prices fell in real terms for nearly 3 years until another bottom in Q2 1982.

 

The bottom of the housing market after the 1973 crash came in Q2 1977 where the average house was £12,689 - offsetting this house price bottom with the gold price peak just 2.5 years later in January 1980 would have meant the average house was only 42.6oz of gold. :)

 

As an example, lets say house prices bottom in real terms in Q2 2012 (could be even longer) and gold peaks about 2.5 years later in Q4 2014 - the best stratergy is to buy your house as near to the bottom as possible (as in Q2 1977, Q2 1982* and Q4 1995*) with the least money down if we've got decent inflation and hang on to as many gold positions as you can until the peak.

 

That might be when interest rates start rising and the housing market begins stalling once again - 2014 is just a projection I have but no-one knows how bad this is all going to get and how much inflation will be created. But buying a house as near to the bottom as you can has got to be the best thing you can do - no point waiting for gold to hit a peak before you buy as that will likely be a peak in housing as well!.

 

Catflap

 

(* at the 1982 and 1995 lows you would have put the least money down on a house and everything else into the stockmarket)

 

Interesting stuff. How does this plan look if you factor in the interest payments? As I recall IRs were high back then.

 

Share this post


Link to post
Share on other sites

I have just found this apologies if iit has already been posted

 

http://seekingalpha.com/article/133523-gol...k-market-bubble

 

 

 

It’s been quite a while since my last contribution to Seeking Alpha, but amidst the vast economic turmoil, there is yet another bubble is brewing. Here’s how you can profit from it.

 

In order to understand the fundamentals of this trade, we need only to review the headlines of the last few months: .......................

 

Upon closer examination, there is what appears to be a massive inverse head and shoulders in the final stages of forming. Given the fact that we just broke that downtrend on the daily chart, could we finally start to see that right shoulder form? We’ll see what happens, but if it does form, gold would be on the verge of an absolutely massive break above $1000.

 

All we can do at this point is and see if it happens. A break above $1000 in gold would seemingly correlate with another leg down in the stock market, not to mention a crash in the dollar, both of which I believe will happen

 

 

 

Share this post


Link to post
Share on other sites
Interesting stuff. How does this plan look if you factor in the interest payments? As I recall IRs were high back then.

 

Not sure - it could work differently this time, but I would expect there to be a corresponding rise in house prices along with gold if they reach a bottom sometime between late 2011 and late 2012 and there is significant inflation. The pattern of a mini-boom like this could occur again where house prices peak at around the time that gold makes it's peak in 2014/2015? - the point I was trying to make is that you might not even need that much gold to buy the average house outright, so long as you buy the house at the bottom of the market with mininal money down and hold onto your gold positions.

 

Obviously you still have to make the interest payments, but if you've bought near the bottom then it's likely that this is going to cost the same or less than the cost of renting anyway so it's still a winner. Any spare money could then be invested in the stockmarket at around 2017/2018 which would likely be the absolute low point in price earnings valuations from where a new 17/18 year secular bull market in stocks might begin.

Share this post


Link to post
Share on other sites
Not sure - it could work differently this time, but I would expect there to be a corresponding rise in house prices along with gold if they reach a bottom sometime between late 2011 and late 2012 and there is significant inflation. The pattern of a mini-boom like this could occur again where house prices peak at around the time that gold makes it's peak in 2014/2015? - the point I was trying to make is that you might not even need that much gold to buy the average house outright, so long as you buy the house at the bottom of the market with mininal money down and hold onto your gold positions.

 

Obviously you still have to make the interest payments, but if you've bought near the bottom then it's likely that this is going to cost the same or less than the cost of renting anyway so it's still a winner. Any spare money could then be invested in the stockmarket at around 2017/2018 which would likely be the absolute low point in price earnings valuations from where a new 17/18 year secular bull market in stocks might begin.

 

Great investment overview and one that I broadly agree with.

 

Is see the rent vs. interest payments as good for the owner occupier but I suspect the deposit will still need to be rather large even at the bottom.

Share this post


Link to post
Share on other sites
any of you guys ever sold coins to CID? I'm thinking of selling a few to fund a trip this summer. They stipulate I would be responsible for shipping and insurance (obvoiusly) but I'm wondering who to use for this service and what will it cost? I'm talking a couple of dozen coins with a current value of approx 6k....

I've sold jewellery at Hatton Garden Metals. They pay on the day they receive your coins. You can send using special delivery.

 

http://www.hattongardenmetals.com/Gold_Coi...Gold_Coins.aspx

http://www.royalmail.com/portal/rm/content...ediaId=63900706

 

Do you have any sovs? And are you anywhere near Manchester?

 

If yes, PM me.

 

 

Share this post


Link to post
Share on other sites
Is see the rent vs. interest payments as good for the owner occupier but I suspect the deposit will still need to be rather large even at the bottom.

 

I agree, a large deposit would still be needed so this argument maybe doesn't work as well for those that are 100% invested in PM's - for those that hold some cash or can get help with a deposit then it still works. I just don't think I would like to risk missing the bottom of the housing market when it came because the average house was still more than 100oz - we all hope it will go well below this but you can never tell what will happen in the future because of what has happened in the past.

 

I'm sure most of us ultimately want to buy a house when they are at rock bottom so we can get on with our lives - postponing the purchase of a house for another 2.5 to 3 years past the bottom in the market because 'UK House Prices in Gold' have not reached their lowest point probably isn't the wisest move. There's going to be the uncertainty of how much further gold prices will rise, trying to time the top and buying into a housing market that could also be at a short-term peak like in late '79. Ultimately, I think the stratergy I outlined may prove better financially, less risky as well being a lot less stressful!

Share this post


Link to post
Share on other sites

Nice read here

 

http://seekingalpha.com/article/136769-a-s...ust-got-hustled

 

 

With the FOMC not announcing additional quantitative easing in its last meeting, you can bet that the impending equity sell-off will provide more than enough public justification to allow the Fed to continue its massive printing campaign so it can depress long bond rates and reflate the bubble into Treasuries through credit expansion.

 

This should be met with a nice ascent in gold prices, especially significant when the $1000/oz barrier is breached. Once the QE endeavor is complete, banks are sufficiently capitalized, and rates are sufficiently depressed to the Federal Reserve’s contentment, rates will start naturally rising, the Treasury bubble will implode, and gold will go parabolic ($15-20k/oz isn’t out of the question). That represents the forthcoming monetary crisis, probably occurring in 2010-2011, which essentially amounts to holders of Treasuries and dollars (most of which are foreign) financing the American recovery. Note: The real major currencies in crisis will be the Pound and Euro, however, because unlike the Dollar, Great Britain and Eurozone lack the political leverage and intrinsic safe-haven quality of the United States to prevent a systemic run on its currency. China trying to abandon its Treasuries positions would be economic and political suicide, but already British and German bond auctions are failing.

 

 

The guy who wrote this is 19 years old !

 

http://seekingalpha.com/author/naufal-sanaullah

 

Share this post


Link to post
Share on other sites

Just got this email from Goldmoney which makes them more tempting to use now. Will be interesting to see how well this works.

 

Dear Sir/Madam,

 

We are very pleased to announce an exciting new initiative that is currently only available to our customers in the United Kingdom, the Isle of Man, Guernsey and Jersey. You can now convert your goldgrams into GoldMoney-branded 100 gram and kilogram bars of gold.

 

One of the main attractions of GoldMoney is our guarantee that we always maintain a one-to-one ratio of physical metal to goldgrams in our database, and we make the audited results of this fact available to our customers. Many of our customers have asked for a more practical way to take delivery of their goldgrams in amounts smaller than 400 ounce gold bars. Therefore, through our partnership with Baird & Co, one of the leading bullion merchants and refiners in the UK, it is now possible to convert your goldgrams into 100 gram and kilogram-sized GoldMoney-branded gold bars.

 

More information about these new bars can be found on our website at:

http://goldmoney.com/en/redeem-gold.php

 

Each bar is produced in Baird & Co.'s factory in London and contains 99.99% pure gold. Once ordered, these bars can either be shipped to you by insured mail through the Royal Mail or you can arrange to pick up your bars at Baird & Co.

 

We at GoldMoney believe in the importance of physical gold ownership, so it is with great pleasure that we announce this exceptional new development to you.

 

Kind regards,

GoldMoney Customer Support

Share this post


Link to post
Share on other sites
:o

Good find. That should be more shocking than it is - at the end I just felt "whatever, more of the same". If he wants to know where the money went he should audit goldman sachs.

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now

×