Gold - Feb 9, 2007 to Mar 16, 2008

[Binkerbear]

Re: Gold - Feb 9+

Re: Gold - Feb 9+

Somethin's goin' down - a noon-day plunge. "Weak hands to strong hands" buying opp is setting up. Hopefully this plunge will last a few days rather than a few minutes.

 

[sharon sanders]

Re: Gold - Feb 9+

Re: Gold - Feb 9+

The gold run up of late is a typical commodity cycle.

It took 25 years for gold to again reach this level. What is the return on that investment? hmmm.....

Commodity hedging is very speculative. I would rather go on a nice vacation to a beach resort. Yup, spend all the money having a good time with loved ones. The return on that investment? - "priceless".

 

[GaudiaRay]

Re: Gold - Feb 9+

Re: Gold - Feb 9+

Preservation of store of value will provide many opportunities to vacation and hug one's loved ones. Loss of it will provide more opportunities to hug one's loved ones. The price of economic freedom is responsible and eternal vigilance.

 

[Laidback Al]

Re: Gold - Feb 9+

Re: Gold - Feb 9+

The gold run up of late is a typical commodity cycle.

It took 25 years for gold to again reach this level. What is the return on that investment? hmmm.....

Especially if your return is measured on 1980 inflation-adjusted dollars.

 

[Binkerbear]

Re: Gold - Feb 9+

Re: Gold - Feb 9+

F1, LA - Your argument, unfortunately, only makes sense if you bought in at the January 1980 high. I agree that it was "dead money" for the 80 's and 90's but the 90's, IMHO, were a total aberration from all that's normal (stocks with huge valuations and zero earnings) evidenced by the big bust at the end.

I will agree that commodities go in cycles but then you both will have to agree then that this cycle will now go all the way to 2020. IOW, the 00's and the 10's may just be "dead money" for stocks, RE, and bonds.

That was the logical argument. In fact, I agree with GR that there could very well be no end in sight for this "cycle" as our whole system may be collapsing like a house of cards. All U.S. citizens will have to "pony up" $80,000 (?) or so to pay off our debt ? Gartman, tonight on CNBC, gave three things that could slow gold's rise (one being a strengthening dollar and maybe restrained government spending but I can't now remember the others) but the funny part was that it was obvious that none of these three things will ever come to pass.

In sum, as GR said, the key is "store of value". Like the RE adage, 'location, location, location' - the adage for the future, 'store of value, store of value, store of value'. Once more: 'store of value'. How many more years will gold have to continue the juggernaut for you all to concede ? Seriously, please give me a date in the future.

 

[GaudiaRay]

Re: Gold - Feb 9+

Re: Gold - Feb 9+

Fl1, you mark the US residential real estate prices for RE investment property, and include commercial real estate. Write them down. Publish them here. Note the high in December 2005. If you and I are still alive in 2010 and again in 2015 and 2020 and 2023, I will so enjoy seeing the loss in the value of all that RE.

Here in California, Riverside County is down 35% at this time; how's it doing in Florida? Worse, the same, or worse??

And we forgot to include the fact that nearly every real estate owner is leveraged. Setting aside the fact that half of those leveraged will be bankrupt, let's look at real estate with a typical 40% mortgage (yes, I'm giving you a giant break because most real estate bought in 2005 and forward was purchased with less than 10% down, and yes, most of those people have lost 100% of every dollar they invested, and yes, they have ruined their credit because they cannot bankrupt their second mortgages, and their helocs. Too bad.)

You are so, so, limited and a tad bit unfair, but I'll be the same way and claim as do you, the high price in never-will-it-go-down-in-price-because-they-are-not-making-new-land-anymore real estate.

Thanks for the great laugh. My parents bought gold when I was around 14. That was in approximately 1959 when the public could again buy gold in the USA. They bought it at $35. How'd they do, now that it's $900?

It's a matter of timing. Alas, you believe in balanced portfolios and never releasing real estate, or barely never. The consequence is that every person who hold real estate today in the US and in much of Europe and in Australia and soon in Asia has had or will have had their economic heads handed to them. Meanwhile, despicable ol'e gold is now at $900, up from $500 area when in CE I advocated for it to be bought and RE to be dumped.

Nothing is forever. Nothing. If one is not constantly attentive, and if one does not know how, beg and crawl and plead with people who really know, whose public track records are their bonafides, to manage or advise.

Those holding retirement funds, like those who work for the public entities in Florida, also, are about to find out that they have had an economic haircut. Some will never see their pensions. Too bad. Gold will see it pension some people. And so will the new gold, food.

Not nice to pick the tops and say that's your albatross, because your albatross is real estate, priced at the end of 2005, and if we add on the gaggle of pandemic-strained geese, called leverage, you're food for Davey's Locker.

Ever try to sell real estate in California or Florida now? Ha! At least one could sell and buy gold every day of every year from when it was first available to right this moment. Can one say that for Real Estate?

 

[GaudiaRay]

Re: Gold - Feb 9+

Re: Gold - Feb 9+

The exhaustion gap is now filled. Technically, this is when the weak hands lose faith and get scared and run away. Bye bye.

It will be time to take one's next position in gold in about 1 week. No need to be first. There's more blood in the streets. There's a gap at 865. Patience.

Nobody long likes to see gold descend in price; but one must understand that humans and commodities breathe.

Later.

 

[sharon sanders]

Re: Gold - Feb 9+

Re: Gold - Feb 9+

Fl1, you mark the US residential real estate prices for RE investment property, and include commercial real estate. Write them down. Publish them here. Note the high in December 2005. If you and I are still alive in 2010 and again in 2015 and 2020 and 2023, I will so enjoy seeing the loss in the value of all that RE.

Here in California, Riverside County is down 35% at this time; how's it doing in Florida? Worse, the same, or worse??

And we forgot to include the fact that nearly every real estate owner is leveraged. Setting aside the fact that half of those leveraged will be bankrupt, let's look at real estate with a typical 40% mortgage (yes, I'm giving you a giant break because most real estate bought in 2005 and forward was purchased with less than 10% down, and yes, most of those people have lost 100% of every dollar they invested, and yes, they have ruined their credit because they cannot bankrupt their second mortgages, and their helocs. Too bad.)

You are so, so, limited and a tad bit unfair, but I'll be the same way and claim as do you, the high price in never-will-it-go-down-in-price-because-they-are-not-making-new-land-anymore real estate.

Thanks for the great laugh. My parents bought gold when I was around 14. That was in approximately 1959 when the public could again buy gold in the USA. They bought it at $35. How'd they do, now that it's $900?

It's a matter of timing. Alas, you believe in balanced portfolios and never releasing real estate, or barely never. The consequence is that every person who hold real estate today in the US and in much of Europe and in Australia and soon in Asia has had or will have had their economic heads handed to them. Meanwhile, despicable ol'e gold is now at $900, up from $500 area when in CE I advocated for it to be bought and RE to be dumped.

Nothing is forever. Nothing. If one is not constantly attentive, and if one does not know how, beg and crawl and plead with people who really know, whose public track records are their bonafides, to manage or advise.

Those holding retirement funds, like those who work for the public entities in Florida, also, are about to find out that they have had an economic haircut. Some will never see their pensions. Too bad. Gold will see it pension some people. And so will the new gold, food.

Not nice to pick the tops and say that's your albatross, because your albatross is real estate, priced at the end of 2005, and if we add on the gaggle of pandemic-strained geese, called leverage, you're food for Davey's Locker.

Ever try to sell real estate in California or Florida now? Ha! At least one could sell and buy gold every day of every year from when it was first available to right this moment. Can one say that for Real Estate?

Real estate has highs and lows like every other commodity.

I believe that if we look at real estate appreciation from 1981 to 2008, it will out pace gold appreciation by hundreds of percent. Oh, wait....0 times 0 = 0.

Let me put it this way - if you bought real estate in 1981 and held it until now, you have made money. Unlike gold.

And - you can live in your house and deduct the mortgage interest from your income.

 

[Laidback Al]

Re: Gold - Feb 9+

Re: Gold - Feb 9+

if you bought real estate in 1981 and held it until now, you have made money. Unlike gold.

No, you would still be holding real estate. You would only "make money" if you sell and translated those holdings into some store of value that has no potential of devaluing in the future. GR will say that would be gold.

One thing is certain. If the world experiences a pandemic with a high CFR, you can be sure that real estate will NOT hold its value. It will be dirt cheap.

 

[AlaskaDenise]

Re: Gold - Feb 9+

Re: Gold - Feb 9+

... pandemic with a high CFR, you can be sure that real estate will NOT hold its value. It will be dirt cheap.

This was the source of the "Transfer of wealth" after 1918 flu - people who had never been able to afford property before, now could due to the low prices. I'm not an economist, but why should it be any different this time?

.

 

[GaudiaRay]

Re: Gold - Feb 9+

Re: Gold - Feb 9+

The argument is ridiculous. A home is a home. It has zero value. If one can afford it, one buys one. If one cannot, then one cannot. There are politically motivated tax incentives to own a home...write offs, deductions, recapture of expenses as a reduction of capital gains...a bunch of political hooey.

We all have to live somewhere. If the home were an investment, the opportunity to profit at the top of the market has passed. But it's not. It's a home.

As to all other real estate, it's no different than gold. It's a store of value that gets assigned greater or lesser value, depending on what's happening in the country where it is located, and the region withing the country in which it's located.

Gold was sought and accumulated all the way from when in the USA it was released for sale at 35 to its top at 887.50. That appreciation was stupendous. Then it topped and dropped by nearly 70%.

This is what will happen in real estate and is happening now.

At the time, even I, then a young man who earned what would be multi six figures then dealing in gold and silver, never expected such a long and continuing decline. I entered a different business, and kept a meaningful amount of the hard metal, watching my "profits" go from 25 to 9 when I liquidated some of my silver, and watching gold descend and descend and descend.

At this time, the real estate owners are in the same boat. They will swear it won't go down in value, can't, won't, shan't, and never will. Hooey. Price drops of 50% are easily expected, across the board. Only there's a difference. Most in gold were not leveraged. Most in real estate are leveraged. This time, the majority of RE holders who purchased within the past 8 years will lose their real estate by foreclosure or will sell with a loss.

This time, the unwanted asset, the one that never earns interest and doesn't provide a roof over one's head...that asset, gold, will ascend rapidly, as it is now doing, long past anyone's dream number, and repeat its rise of 28 years ago. Few who experienced it are alive and actively investing today.

The reference to 1980 is a joke. People who bought houses in the past have repeatedly lost money. Between 1946 and 1948 in the USA, house prices descended by over 20%...more like 30%+. Ah, but who remembers! Choosing an arbitrary date is absurd. I chose 2005 for real estate because the losses since then have been anywhere between 10 and 40% already, and will drop much, much more.

The game is to protect what is then the store of value; that shifts. That requires responsible and timely attention.

Recall yesterday that I saw the exhaustion gap and said down will come gold? Is that dumb luck? Got the message??? Learn what you need to learn, for yourself, and then do what you know. For RE holders, do what you need to do, which at this time is ??? For gold holders, it's time shortly to buy much more, imo.

Laidback Al, you are 1000% correct. RE will be vacant and its price will drop during severe pandemia and for years afterwards. Gold will be the store of value, now. It won't stay this way forever, but over the next 3 years, you can book it.

 

[GaudiaRay]

Re: Gold - Feb 9+

Re: Gold - Feb 9+

For the lumpen's here, lookie, lookie. Gold's already at 880 as I call it quits for the night! Ain't that a surprise? NOT. Meanwhile, all those who bought in in China and Europe are about to meet their maker as gold drops 60 points from its high and wipes those people from the economic map.

Weak hands always get slaughtered. And those with cognitive dissonance, like the current flock of real estate as an investment holders get their economic necks chopped off.

Now's the time to get very smart, very quickly. You will have an opportunity to decide what you want and need economically. Step up to the challenge. Become independent of anyone's advise, including my own.

 

[sharon sanders]

Re: Gold - Feb 9+

Re: Gold - Feb 9+

No, you would still be holding real estate. You would only "make money" if you sell and translated those holdings into some store of value that has no potential of devaluing in the future. GR will say that would be gold.

One thing is certain. If the world experiences a pandemic with a high CFR, you can be sure that real estate will NOT hold its value. It will be dirt cheap.

I probably should have said your home investment will be an asset with significant equity on a balance sheet, unless, of course, you have taken money out of the home to buy....say...err.....gold.

There will be many financial consequences to a pandemic. One is a depression in the construction industry. But, of course, there will be phases. The real estate industry will be profitable/not profitable depending which phase we are in, the local job market, the overall viability of the financial system, and the location of the property.

 

[Binkerbear]

Re: Gold - Feb 9+

Re: Gold - Feb 9+

I will be gone for one month although I may be able to post on a dial-up connection but it will be sporadic; I post this because I don't want anyone to think that I have lost interest here. On the contrary, things are heating up here again just like what's going on in the financial markets.

Another reason given for gold's recent decline is that the traders are having to build liquidity from their profitable positions to counteract collapsing stock prices. For the next month, I'm much more concerned with a financial armageddon than an immediate pandemic threat. One less worry while I'm away from the home base.

 

[hawkeye]

Re: Gold - Feb 9+

Re: Gold - Feb 9+

See you when you get back Binkerbear!

 

[GaudiaRay]

Re: Gold - Feb 9+

Re: Gold - Feb 9+

During the pandemic, it's my current conclusion there will be massive price INFLATION, not price deflation.

Why?

The argument for deflation is: shrinking transaction volume, massive unemployment, leading to collapsing prices, like real estate. The monetary argument for deflation is continuous at www.globaleconomics.blogspot.com. Sure, real estate, now the big albatross family, by the millions and tens of millions (who enjoy eating economic losses, they feel sooo good), will collapse, with the dead not renewing their leases or paying on their mortgages, and the unemployed at wit's end, also unable to pay.

Maybe there's a guru here who really knows about real estate? Maybe not. This writer, a non-guru, has said, for now many years, to stay away from RE, including to that one guy who so wanted to hold onto his strip mall, which I'm quite convinced this year will have bruised both his eyes and will probably be working on his internal organs, he having lost all his profits and well probably his equity...one can hope he didn't take out a recourse 2nd because he was such a genius he wanted to leverage his "winnings" because that will have sunk him just like those whose piggery led them into 2nd homes [Are you holding a second home other than for purposes of fleeing there at the inception of bird flu? Broke yet?]

That's one big deflationary asset; sorry, wish you well.

To digress... The fiat will be in short supply; so what!!

What will happen will be fear, big time. Wanna peek? Look at Kenya today. There, the food distribution has dropped to a trickle. The truck drivers are frightened and will not drive through territory controlled by tribes other than their own. The Safeway tribe will be hunted everywhere they try to deliver.

So, the cost of necessities will skyrocket. That's called demand-pull and cost-push inflation. That's price inflation.

Money will not easily be able to purchase replacements for scarce commodities. So, prices will SKYROCKET...AS IN GO UP SO INCREDIBLY HIGH THAT THE PRICE RISE ALONE WILL CAUSE A DROP IN THE FAITH OF CURRENCY.

Oh, gee, what's left? Hmmm. Oh, yes, it's the inedible, indigestible, scrumptious thing called "gold". Drat say the naysayers. There will be little left besides large stores of necessary items, like toilet paper and food, and their medium of exchange, and it won't be a promise and it won't be money.

I'll leave it to you to guess what it will be.


On a side note, gold appears to be ready to fill its breakaway gap, and probably camp down here to shake out the weak hands and the new, Shanghai, weak hands. When they let go, their introductory capitulation to their own naivete when it comes to investing in gold, then it will be, even at these lofty levels, bargain basement time, time for the last buy in...before the next buy in at $1000 area, when again weak hands will come running in, and repeating all the way up to $2100 and soon $2600 and soon thereafter $3000 and my exit price, $6000. Want my position at over 6 times what it's presently selling for? Kewl. I'll take the first born and everything else the buyer has at that price, and they'll gladly give it to me, as they will have been either ignorant or frightened and, if they are conscious now, will have refused now to become baptized and converted in the golden calf religious sect. And that's just my humble opinion, of course.

 

[GaudiaRay]

Re: Gold - Feb 9+

Re: Gold - Feb 9+

As I posted a few days ago,
"On a side note, gold appears to be ready to fill its breakaway gap, and probably camp down here to shake out the weak hands and the new, Shanghai, weak hands. When they let go, their introductory capitulation to their own naivete when it comes to investing in gold, then it will be, even at these lofty levels, bargain basement time, time for the last buy in...before the next buy in at $1000 area, when again weak hands will come running in, and repeating all the way up to $2100 and soon $2600 and soon thereafter $3000 and my exit price, $6000."

The market has dropped, per my understanding stated here. It is now a buy.
This buy window will disappear probably on Friday. So, it's enter now or best to you next time.

Jim Sinclair is now saying $1650 nearly immediately, and he said it this afternoon. He said what I have been saying. The stock market is about to drop 1000 points. I believe the Dow Jones Industrial Averages will nearly immediately see 9800, when it is now 12,300-400.

So, the stores of value: real estate, stocks, corporate bonds, and nearly everything except what people trust, this time around, gold and silver, have dropped and are about to terminate financially the conservative and the meek. Of course, this is my mere opinion, and albeit I've been way too right to be a random event (so unlike bird flu), this time, possibly the layoffs due to funding cuts, will leave you and me so incredibly exposed, we will know for certain there's no place to turn...but guess where.

I've said my piece. I'm saying now because once again, this is such a simple game and so many believe they've no reason to be a player...when in fact, each and every one of us are players, like it or not.

 

[Laidback Al]

Re: Gold - Feb 9+

Re: Gold - Feb 9+

The stock market is about to drop 1000 points. I believe the Dow Jones Industrial Averages will nearly immediately see 9800, when it is now 12,300-400.

The Dow lost almost 1000 points in the past two weeks of trading. The Dow itself is already off 2100+ points (15%) of its 52 week high and still has about 230 more to go to drop below the 52 week low. By your estimate you see another 20% (2300) slide in the index. But don?t you think that the projected rate cut at the end of the month and a proposed ?fiscal stimulus? package will buoy up the stock market for at least a short while. It is a long way down to 9800 on the Dow. Had someone only owned the Dow 30 and jumped out of the market 2 weeks ago (into cash), they would be ahead relatively by about 7% today. Gold hasn't returned 7% over these past two weeks.<?xml:namespace prefix = o ns = "urn:schemas-microsoft-comfficeffice" /><o></o>

 

[GaudiaRay]

Re: Gold - Feb 9+

Re: Gold - Feb 9+

Laidback Al, nobody jumped out of the market 2 weeks ago into cash, or so few it's not worth mentioning.

Drops of 10% and 20% in reality mean very little. However, to the stockholders who are "in" when this is down double 20%, they'll be feeling plenty of economic pain. They will pretend...It's my 401K, I'm in for the long term, It will snap back.

This is not gold. Gold dropped from 700 roughly to 565 roughly, about 20%. Did anyone feel pain? Even I sat through the entire move, about 1 year, because I'm a believer in severe pandemic which in an instant will drive gold's price to the moon.

We will hit 865, most probably today. That's fills the recent gaps, and it is gold down 50 points. 914 high to 864 low = 50 points. Fibonacci numbers will show the probable price in that range, but it will drop through 864. Everyone knew Shanghai was opening. Buy the rumor; sell the news. This is just a time consumption, and then $1600+ will appear quickly.

Think about it, not the nominal number, but the concept. The price moves as a percentage of itself. Prices move 20% of the recent price often, sometimes in a day. Gold now trades in a range of $20 in a day as a common daily fluctuation. Wait til it's $50 in a day and then $100. Those days will appear soon enough.

And here's a final reason gold's not even close to done. My wealthy mid-30's entrepreneurial friend, to who I gave a Krug for his birthday 1 yr and 3 months ago, said yesterday, "I wish I had bought when you told me to." When I told him to buy now, he said, "Do you really think so?"

That's the message. The sheep are not yet lining up to be fleeced. Later, he'll panic and begin buying, and dismiss my old advice. Then, and only then, will the price begin to reach its top. I am guessing it will be $3000 and then scream up in panic, at which time, one must ask, "What can withstand the pandemic that's not gold or silver?"

Gee, let's go ask the point mutationists. They know.

But this recombination believer, here, who's been dead on right way too many times to be random mutation or reassortion "am I lucky", tells you what the parabolic chart says and what 50 years (so I'm older) of continuous awareness during which time decades were spent reflecting on its price movements daily, tells me that one can predict. I'm not a senior leader of a major institution. In my world, I'm right or I'm economically dead. In that guy's/gal's world, their fallback line will always be, "Who could have predicted this?" [Get the economic noose, and use it; choose which of us should get it; I'd be long dead if I could drive a business forward, hearing squeaks only, or seeing reality and saying, "Can't figure it out." Believe as you may...]

 

[GaudiaRay]

Re: Gold - Feb 9+

Re: Gold - Feb 9+

Gold is too powerful to close the 865 area gap. It's now back at 880, spot, NY.
This is the buying range. Trying to scalp it will leave those who wanted in standing in the clinic line hoping they can get an ineffectual antiviral, pretending it will save them...because there was no proactive planning, because of course it was impossible to look into the future...because the flu is random.

What I just said is that those happily holding real estate are toast and holding that antiviral which is now being diss'd in Egypt will make them toast, and failing to get in on this will make them toast, and standing there dumbfounded to the fact that the same SNP's keep showing up is not random.

Oh, I'm sorry. Nobody can predict anything about the future. My apologies.