What's up with gold?

Have fun sitting on your piles of gold in your rented houses and preaching to your respective choirs about how gold will save you from financial Armageddon. And while you are at it, don’t forget to stock pile weapons, ammo and freeze dried food.


I suppose that everyone's opinion regarding financial assets is based heavily upon the position that they have taken in a particular asset or class of assets. That's human nature. Every financial asset is subject to market fluctuation. Using leverage, whether it's to finance a house, a business deal, or a commodity futures contract.............only increases the risk.

If you want to reduce risk, don't borrow - and take care to diversify your holdings. If you want to get rich, leverage everything you own and buy as much of the asset you most strongly believe is poised to double within 2 months! You can't reduce risk and get rich at the same time, so at least define your objectives clearly before you invest.

If you have a strong belief in the U.S. markets remaining strong, invest in common stocks. If you think that inflation is going to be a problem for a long time to come, hedge against it with gold. If you think that Mongrel hoards are coming, do the weapons, ammo and freeze-dried food thing. Everybody has an opinion, and that's what makes a market.

Sometimes, you just try real hard to do the best you can. If someone really knows all the answers, I'd be really, really surprised. Me? I just invest when the "feelin" is right!

Yeah, well, the housing market is cyclical too. A house bought at the top in the most recent run up may not prove to be a great investment, at least not in the short run, but gold purchased at $800 in 1980 was not a good investment either. At least you can live in the house. .......remember that this is not yet 1980 for gold but we are definitely at a 10-15 year peak on housing prices.

If you're one of the 10-20% of people that became over-leveraged to get into a house the past few years, you might not be able to live in that house as your payments become unaffordable (ie foreclosures). You are starting to see some financial analysts recommending renting over ownership. The only ones who would never recommend such a course are mortgage lenders, real estate agents, and bankers.

roadrunner

No, these are analysts who write "at large" and aren't offering anything. In fact a number of them are following their own strategy.
As horrible as it may seem to some of their recommendations include parking a % of funds into hard assets. In fact any CFA these days who aere not recommending to their clients to keep at least 5% of their liquid assets in hard assets (such as PM's) are doing their clients an injustice. But don't worry those will be the late-comers to the party once the peak is reached. And once again, they'll be doing their clients an injustice.

roadrunner

<< <i>Its going down cause I finally bought some. >>




Now that is what I call a conspiracy

Normally a 25 year up market is not followed by the same thing.
The down markets last more than a couple of years as well.
The last downturn in housing began with the 1990 recession and probably bottomed out in 1996-7. During that time, housing in the northeast fell around 30%.

I think CFA's should recommend that their clients keep 5-15% in PM's or equivalents. My own personnel belief at this time is 15% minimum in hard assets. And there is nothing wrong with extending to 25-35% if one is comfortable with it.

Housing prices should continue to fall if rates escalate. Depending on which way you lean is where you should go. I think that inflation will continue to expand and rates will have to be slowly raised to combat it. They sure as heck won't be lowered significantly imo.

10 year prime rates

roadrunner

Who is going to be able to buy all these new and foreclosed upon homes if they don't have decent jobs to make a good living? First inflation then a recession. How is that good for home buying?

roadrunner