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The Gold Bubble... Just how badly have the silly goldbugs failed?
Topic Started: 21 Jun 2014, 11:46 AM (27,209 Views)
Blondie girl
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Last Resort
18 Mar 2015, 03:52 PM
The gold Vs. housing argument is flawed. They are both hard assets regardless how you want to price them. I own both. As a holder of gold I don't hope to be to be right all the time . I just need to be right once if and when there is a problem with the dollar in which case gold will reflect the weakness of the dollar. In terms of gold vs real estate gold has been winning in the past ten to 15 years (http://www.bullionbaron.com/2013/08/australian-houses-priced-in-gold-silver.html). Houses are crashing priced in gold and silver. But unfortunately no bank will give you a million bucks to go buy gold even with the 20% deposit.

Real estate in a scenario of AUD falling relentlessly due to economic headwinds poses the problem of capital flight which requires higher interest rates which coupled with the usually associated high unemployment and shit economy poses problems for housing. I don't want to see any of this happen but I have a 10% allocation to gold just in case. Gold is not an investment gold is money and its not the price of gold that falls and rises its the price of currency that changes.

An ounce of gold is always and ounce of gold and really doesn't need to be approached with so much emotion. Real estate on the other hand has been a good investment that is in not so many words guaranteed by the Australian government never to lose value in AUD terms. As long as the government can stay true to this promise house prices will rise.

But intrinsically real estate is a consumption item that people need. I'm sure if vested interests, the ATO, successive federal, state and municipal governments controlled the supply, and encouraged the hoarding of cars and given investors the capacity to offset their loses on those cars, price gains would be made there as well.
You've made some interesting points.

Wealth is somewhat relative, someone in the x% of wealthiest people having invested in gold may not have maintained their position relative to others who have invested in other things.
Therefore I'd say that the preservation of wealth should not be referenced by nominal amounts, but relative to average return, or marginal purchasing power. In the end it's about drawing a baseline, sure, you can draw it on inflation adjusted purchasing power instead of what an alternative return would of been, but then you should question what is the use of such measure? Why would anyone bother with what's a "better store of wealth" versus what is a "better economic outcome"?

It's about determining a baseline.

Wealth is what one owns & holds. What does one exactly OWN AND KEEP?

Some serious gold people have been adamant to me that gold should not be viewed as an investment, it's not about how gold fares or performs. It's a store of wealth.

Well, clearly there's ways of outperforming gold,with the right info, opportunities & acumen. :lol

The point I'm making is not what outperforms what.
But what has held value/wealth?
FiatBug
19 Mar 2015, 01:36 AM
Silly goldbugs bought around the year 2011.
Smart goldbugs bought well before 2011.

Housebugs can also be silly if they buy at the wrong time:

Posted Image

You've missed way back in 1999... Was a very good year for property shopping.
Edited by Blondie girl, 20 Mar 2015, 12:15 AM.
Newjerk? can you try harder than dig up another person's blog. My first promo was with Billabong and my name in English is modified with a T, am Perth born but also lived in Sydney to make my $$
It's Absolutely Fabulous if it includes brilliant locations, & high calibre tenants..what more does one want? Understand the power of the two "P"" or be financially challenged
Even better when there is family who are property mad and one is born in some entitlements.....Understand that beautiful women are the exhibitionists we crave attention, whilst hot blooded men are the voyeurs ... A stunning woman can command and takes pleasure in being noticed. Seems not too many understand what it means to hold and own props and get threatened by those who do.
Banks are considered to be law abiding and & rather boring places yeah not true . A bank balance sheet will show capital is dwarfed by their liabilities this means when a portions of loans is falling its problems for the bank.
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Jimbo
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Blondie girl
20 Mar 2015, 12:10 AM
Wealth is somewhat relative, someone in the x% of wealthiest people having invested in gold may not have maintained their position relative to others who have invested in other things.
Exactly.

If I work for an hour and I earn a buck, an hours worth of expended energy = $1.00.

I could invest my dollar into a shovel and dig up some oil and my investment (in the shovel) could return a enough dollars to buy a thousand shovels. But will each shovel dig up enough oil to to earn enough to buy me a thousand more shovels to do the same again?

Will everyone else who has seen me turn a dollar into a shovel and a shovel into oil, be able to profit in the same way?

Matthew, 30 Jan 2016, 09:21 AM Your simplistic view is so flawed it is not worth debating. The current oversupply will be swallowed in 12 months. By the time dumb shits like you realise this prices will already be :?: rising.
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FiatBug
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Blondie girl
20 Mar 2015, 12:10 AM
You've missed way back in 1999... Was a very good year for property shopping.

Just for you Blondie and for the silly Goldbugs and for the ever so clever Housebugs who also bought in 1999.
(NB:The ABS indices I have only go back to March 2002 so for
the period June 1999 to March 2002 I spliced in data from Residex)

Posted Image


Blondie girl
20 Mar 2015, 12:10 AM
In terms of gold vs real estate gold has been winning in the past ten to 15 years.
Houses are crashing priced in gold and silver.
Houses priced in gold were crashing up until 2012 after which interest rate reductions
and the blow-off in the gold price caused a sharp reversal in Australia and USA (but also in UK, Canada, and NZ).
For simplicity the attached chart just shows Australia and USA.
Right now the 'median' priced house in USA will cost 100 oz go gold but in Australia it requires around 400oz





Posted Image
Correction - that's 200oz in USA
Attached to this post:
Attachments: Houses_and_Gold_from_1999.jpg (154.71 KB)
Attachments: Houses_Priced_In_Gold.jpg (155.04 KB)
Edited by FiatBug, 20 Mar 2015, 03:59 AM.
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The Whole Truth
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stinkbug
19 Mar 2015, 08:45 PM
To call money in an offset account "tied up" is simply wrong.
Are you serious?
Do you use that money, in your offset, to trade in and out of the stockmarket (ever)
Have you used it for etf's?
Have you put it to work for any other purpose than it's intended purpose offsetting a mortgage?

I didn't think so. Oh by the way, I don't consider using it to buy scooters or holidays or furniture as putting it to work. It's tied up, no two ways about it. It's the property speculators only hedge, a buffer basically for when the wheels fall off.
"Panics do not destroy capital; they merely reveal the extent to which it has been previously destroyed by its betrayal into hopelessly unproductive works." John Stuart Mill
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Mallard
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The Whole Truth
20 Mar 2015, 07:18 AM
Are you serious?
Do you use that money, in your offset, to trade in and out of the stockmarket (ever)
Have you used it for etf's?
Have you put it to work for any other purpose than it's intended purpose offsetting a mortgage?

I didn't think so. Oh by the way, I don't consider using it to buy scooters or holidays or furniture as putting it to work. It's tied up, no two ways about it. It's the property speculators only hedge, a buffer basically for when the wheels fall off.
Have a day off. "tied up" has a clear meaning in that it's locked away, unable to be accessed. You got it wrong. Don't get sand in your vagina about it
Collecting desperation.
Ex-Bp Golly April 2 2015. "I see with a slight overshoot -70% [fall in Sydney house prices] as being well within possibility"
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The Whole Truth
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Shadow
18 Mar 2015, 10:33 PM


To me, it is pointless holding gold since it has no yield. It doesn't do anything. You can't leverage it or borrow against it. It just sits there shining prettily while the owner hopes and prays for the price to go up. gold is completely useless as an investment.
Well a retiree who put $200k in gold in 2004 @ $500 an ounce would have to disagree with you shadow. While all their friends are still struggling to meet the repayments on houses they bought back then the goldbug is sitting on $600k, with the historical assurance that gold (if bought at an opportune time) is a fantastic investment that keeps pace with inflation.

Oh I see gold shot up again last night, another reversal, and time for you to crawl back under your rock and brood about why house prices are not doubling every 7 years like the promised you they would. You know If you had any money, and had bought the dips in gold, you would be well ahead on your investment now.
"Panics do not destroy capital; they merely reveal the extent to which it has been previously destroyed by its betrayal into hopelessly unproductive works." John Stuart Mill
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Jimbo
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The Whole Truth
20 Mar 2015, 07:31 AM
Oh I see gold shot up again last night, another reversal, and time for you to crawl back under your rock and brood about why house prices are not doubling every 7 years like the promised you they would. You know If you had any money, and had bought the dips in gold, you would be well ahead on your investment now.
Very quiet on here yesterday and so far today. Gold did everything it was supposed to do yesterday, all the things people like us said it would do. The property perma bulls are now wondering if they have got everything wrong and are taking a day or two to think about it.
Matthew, 30 Jan 2016, 09:21 AM Your simplistic view is so flawed it is not worth debating. The current oversupply will be swallowed in 12 months. By the time dumb shits like you realise this prices will already be :?: rising.
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The Whole Truth
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Mallard
20 Mar 2015, 07:22 AM
Have a day off. "tied up" has a clear meaning in that it's locked away, unable to be accessed. You got it wrong.
Hardly any small householder investments are truly tied up. Do you think your IP (if you have one) is tied up capital? You could sell it in a month in the right market. You could loan against it, reducing your capital stake in it instantly, assuming you have any equity...

Tied up is as much a matter of opinion and a matter of personal choices for most small investors. If a speculator keeps 10k in a offset for the sole purpose of reducing their IO loan repayments they have tied it up just as goldbug has tied up capital in gold. Either could liquidate in a day if they chose to.

I advise you not to follow the lead of the banker investment legalese dictionary, they have a nasty habit of changing the meanings every few years and you will get caught on the cold. Just like all the crowd who bought houses in the last 10 years.
Jimbo
20 Mar 2015, 07:45 AM
Very quiet on here yesterday and so far today. Gold did everything it was supposed to do yesterday, all the things people like us said it would do. The property perma bulls are now wondering if they have got everything wrong and are taking a day or two to think about it.
The anti gold crowd waited too long to begin their campaign it seems :lol

The most obvious benefit of being a gold bug is that you are already wealthy hey! You don't need gold to double in price every 7 years to bail you out of a massive loan.
I really find it hard to believe that so many otherwise intelligent Australians signed up for these IO loans? And are still signing up in droves? Well they are screwed now. A collapsing economy, no way those houses will pay themselves off in the foreseeable future. Perpetual debt slaves...
Edited by The Whole Truth, 20 Mar 2015, 08:01 AM.
"Panics do not destroy capital; they merely reveal the extent to which it has been previously destroyed by its betrayal into hopelessly unproductive works." John Stuart Mill
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Jimbo
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The Whole Truth
20 Mar 2015, 07:47 AM
You don't need gold to double in price every 7 years to bail you out of a massive loan.
The price of Gold never changes if you measure the price of Gold in Gold.

That is why I have some Gold.


It is now mainstream that Janet cannot raise rates by 0.25% without crashing the stock and bond markets. It is mainstream that the USA can add as many jobs as it likes, but without wages growth, they can't stoke inflation.

It is very clear that the current system relies on inflation and without inflation, it collapses.

A system designed to deliver exponential growth can't work without inflation.

Perpetual exponential growth seems possible when you are doubling one and two and three. Take the calculation a few steps further and your calculator breaks.

Most people can't see this.
Edited by Jimbo, 20 Mar 2015, 08:45 AM.
Matthew, 30 Jan 2016, 09:21 AM Your simplistic view is so flawed it is not worth debating. The current oversupply will be swallowed in 12 months. By the time dumb shits like you realise this prices will already be :?: rising.
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The Whole Truth
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A system designed to deliver exponential growth can't work without inflation.

Perpetual exponential growth seems possible when you are doubling one and two and three. Take the calculation a few steps further and your calculator breaks.

Most people can't see this.

most people are'nt even watching. They trust others with the thinking and the others milk them like cows. Australian banks are laughing their heads off at fact that a million or so families signed up for IO loans. They just keep raking in the interest knowing that if things get bad enough they can take all those homes back lock stock and rear deck. Not only that, but the PPOR's they are emcumbered to as well.

PROPERTY SPECULATOR: They couldn't that! "They" wouldn't let them.
OBSERVER: They already are, every day, it just doesn't make the news.
"Panics do not destroy capital; they merely reveal the extent to which it has been previously destroyed by its betrayal into hopelessly unproductive works." John Stuart Mill
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