Housing Bear

Really interesting! Thanks for posting that. I have to renegetiate my rent soon, and it has always gone up in line with RPI! perhaps I'm stupid! I would love to hear similar stories. It is a 22% reduction! Were the landlords shocked when you suggested this?

From the research I have done, it seems that gold is a safe haven in times of financial uncertainty, whether deflationary, or inflationary. Historically, this has usually been the case. However, gold was a POOR investment between 1980 and 2002. Arguably we have much more global uncertanty now than then (although some would differ!) There are one or two people I follow: Merryn Somersett Webb of Moneyweek, and Jim Mellon, co-author of "Wake Up". They both called the collapse of the UK housing market correctly, and very early. I took their advice! Both Moneyweek, and the free "Wake Up" Newslettter (available to anyone) recommend gold. I'm staying with their advice! In addition, should the UK become another Iceland due to a collapse in Sterling, gold holders will, hopefully, be safe, though I could be wrong on that too! Best wishes.

Wll said time 2 raise int.. ! Simple, but profund!

I would like to modify the above post made on 1st March 2009 on page 46 of this thread. To be more accurate, it should have been written as follows, but I am too late to edit it, apparently: I am close friends with one of the main gold bullion and gold coin dealers in the US, according to his literature. He is of the opinion that the big players in the current gold bull market are probably Central Banks, of notably, China, Russia, and Middle Eastern countries like Qatar. These central banks obviously do not buy from his own company, since he does not deal with central bankers! In addition central bankers would be unlikely to announce such purchases! A google search will quickly reveal that this information is widely discussed in the public arena. My friend understands that China has a stated aim of gold backed currency. My friend does not believe that this current rise in price of gold over the last six months is a speculative bubble, using borrowed cash, as in the housing market, or shares in the 1920's. My friend believes that the current rise in thje price of gold is caused at least in part caused by central banks supporting their own currencies, with a lot of private individuals also concerned about bank default, and not without reason! In my own personal opinion, for what it is worth, as QE becomes more widespread, the flight into gold will increase. But I still own mainly Index Linked Certificates, and some gold and silver. By the way, my friend prefers gold to silver. Readers should know that gold is very volatile, and is possibly currently in a major downturn! Please do NOT use this information as an aid to your decisions. I am only an amateur in investments, and not qualified to give any advice to anyone! Best wishes to you all, Housing Bear.

Dear EDM, thank you for your kind reply. You are obviously more experienced than I am, and you are probably correct. I find it very difficult to know what to do, with so many contradictory views being expressed! Of course, that is why there is a market! Best wishes.

Dear EDM, I would be interested in your comments about this article concerning the price of gold following the 1929 crash. http://www.longwavegroup.com/fivephases/fivephases.htm This is written by Ian Gordon, a respected commentator who, unlike me, IS qualified to comment! Best wishes.

Deart EDM, I have great respect for your views on many things, including Index Linked Certificates. However, I obviously differ on gold. I would be intersted in your opinion on this article, http://www.longwavegroup.com/pdf/07_12_04_News.pdf Please read from page 26 onwards. According to this article, by Ian Gordon, a respected commentator, gold is the "sine qua non investment in a deflationary environment". I dont know whether this is true or not, but I think we would agree that we are now in a delationary environment. By the way, I attempted to trade in and out of gold positions on Jan 9th 2009, when gold fell quite badly. I was advised not to do this in future! By the time I had got back into gold again, I had missed out on a large increase in the price of gold. I am informed that in the 70's gold was very volatile, as it is now. When Russia invaded Afghanistan, the price of gold dramatically increased, nearly doubling in price. I would like to know if this doubling in price is correct, or not. I was simply advised not to try to trade gold, but to just hold it. PLEASE DO NOT EVEN THINK OF FOLLOWING MY ADVICE! I AM A COMPLETE AMATEUR CONCERNING INVESTMENTS, UNLIKE MANY OTHERS ON THIS SITE!

It was me on that thread. I have a great deal of respect for EDM, and agree with him about Index Linked Government Certificates, despite a lot of opposition on that thread! However, on the gold issue, I beg to differ. I am close friends with one of the main gold bullion and gold coin dealers in the US, according to his literature. He is of the opinion that the big players in the current gold bull market are probably Central Banks, of notably, China, Russia, and Middle Eastern countries like Qatar. These central banks obviously do not buy from his own company, since he does not deal with central bankers! In addition central bankers would be unlikely to announce such purchases! A google search will quickly reveal that this information is widely discussed in the public arena. My friend understands that China has a stated aim of gold backed currency. My friend does not believe that this current rise in price of gold over the last six months is a speculative bubble, using borrowed cash, as in the housing market, or shares in the 1920's. My friend believes that the current rise in thje price of gold is caused at least in part caused by central banks supporting their own currencies, with a lot of private individuals also concerned about bank default, and not without reason! In my own personal opinion, for what it is worth, as QE becomes more widespread, the flight into gold will increase. But I still own mainly Index Linked Certificates, and some gold and silver. By the way, my friend prefers gold to silver. Readers sholud know that gold is very volatile, and is possibly currently in a major downturn! Please do NOT use this information as an aid to your decisions. I am only an amateur in investments, and not qualified to give any advice to anyone!

UK bank nortgage lending is already down about 80% , and will lend less and less as the recession and unemployment increase, and they are faced with a glut of reposessed houses on their mortgage books. I forsee a time when houses are bought with cash, not mortgages, because mortgages will be unavailable. At that point an 80% fall from the peak is not beyond the realms of posibility. We are all in uncharted waters. Remember that the stock market is a forward indicator of the real economy, and who would have anticipated the stock market collapse we are now seeing? Bank shares have fallen about 90%, and bank equity is now decimated. That is why they now want 30% LTV to lend on housing.

There is nothing new about lowering UK interest rates, or QE, which has ben widely reported. So Forex dealers have already discounted both of these. However, both GBP and USD will slowly grow weaker against (fundamentally) stronger currencies, probably over months, or even years, IMHO. But I am only guessing!

Sorry, dont agree. When has printing money EVER helped an economy? Weimar Germany, Zimbabwe, Argentina? Any others come to mind? There are dozens of examples, and the people of the country have always sufferred.

“Well said, EDM! I am close friends with one of the main gold bullion and gold coin dealers in the US, according to his literature. He is of the opinion that the big players in the current gold bull market are probably Central Banks, of notably, China, Russia, and Middle Eastern countries like Qatar. These central banks obviously do not buy from his own company, since he does not deal with central bankers! In addition central bankers would be unlikely to announce such purchases! A Google search will quickly reveal that this information is widely discussed in the public arena, as, for example, in the following article: http://www.marketoracle.co.uk/Article6586.html My friend understands that China has a stated aim of a gold backed currency. My friend does not believe that this current rise in price of gold over the last six months is a speculative bubble, using borrowed cash, as in the housing market, or shares in the 1920's. My friend believes that the current rise in the price of gold is caused at least in part caused by central banks supporting their own currencies, with a lot of private individuals also concerned about bank default, and not without reason! In my own personal opinion, for what it is worth, as QE becomes more widespread, the flight into gold will increase. But I still own mainly Index Linked Certificates, and some gold and silver. By the way, my friend prefers gold to silver. Readers should know that gold is very volatile, and is possibly currently in a major downturn! Please do NOT use this information as an aid to your decisions. I am only an amateur in investments, and not qualified to give any advice to anyone! Best wishes to you all, Housing Bear.”

Excellent post, and excellent idea! Have you had a chance to update this graph in view of the impending Depression ? It shoould be very interesting! Thank you.

Dear IRS, thank you for your contribution. Could you please provide a link or other source evidence to substantiate your statement? As far as I am aware, UK Government Index Linked Gilts and NS&I Index Linked Certificates have only been available for about 30 years. Thank you.

The majority of holders of gold bullion with www.bullionvault.co.uk keep their allocated gold in an insured vault in Zurich, including me. Since Russian and Chinese central banks in particular are buying gold, and are likely to continue to do so in the forseeable future, then local UK government legislation should not affect the world price of gold bullion. Have I missed something?

Very interesting idea! Tax relief as well! Does anybody know if there is a fund for agricultural land that we can buy, rather than a nearby field?

One of the reasons I bought these is because the purchaser is protected if there is a crash in Sterling against other currencies. Of course this has already occurred, but some commentatiors have suggested that the Uk could easily become another Iceland. In addition, a couple can buy £120,000 of these by buying in trust for each other.

Excellent post, and I had not appreciated the "upward ratchet system". Thank you for pointing it out. i believe that NS&I Index Linked Certificates should be of real interest to STR individuals, because they seem to protect you both in times of deflation and inflation, unlike most other asset classes. Personally I am mostly in these, with about 20% gold and silver. Potential buyers should note that the 1% interest currently available has varies quite a lot over the last 3 years. Best wishes.

As redundancies increase (sadly) this is going to get a lot worse, and will probably exceed the reposessions of the 1990's.

Completely agree. There is, IMHO, a very real risk of a more serious run on Sterling than we have already seen, just like Iceland. Why would any foreign central bank want to hold Sterling? Virtually zero interest rates, failing banks, and talk of QE. In Iceland right now inflation is running at approximately 25%, all caused by a currency collapse. History is littered with countries that resorted to the printing press to cure their problems. There are literally dozens of examples, well known ones being Germany, Zimbabwe, and Argentina. What makes the UK so different?

I am a believer in simple long term technical analysis of non-inflation adjusted financial charts, as are most investment banks and hedge funds. Using such charts, simple technical analysis of HP charts, which must be non inflation adjusted, show a 58% fall from top to bottom, starting in 2007, and finishing somewhere around 2011 to 2013. However, central banks, particularly US and UK central banks, have the ability to completely alter the playing field by Quantitative Easing. Not only will this inevitably cause inflation on a massive scale, but there is also the very real risk of a currency collapse, just like Iceland. The UK risk of a currency collapse in GBP is obviously greater than the US risk in USD, although both currencies will almost certainly collapse anyway over the next five years, rather like a slow motion train crash. We would then be in completely uncharted territory, where all forms of analysis, both fundamental and technical, of house prices are irrelevant as future price indicators. In other words, because of potential Quantitative Easing, all normal analysis is unlikely to be helpful. For this reason, our STR fund is 20% in gold and silver bullion in Zurich, buy I may increase this dramatically over the next few weeks. Most of the rest is in NS&I index linked certificates, for the time being. In such a situation, UK banks will not be lending, any more than they are now. UK House prices will be in uncharted territory, where house will be bought and sold with cash rather than mortgages. Guesses, anyone?

Long term bond holders are obviously forward looking, over the full length the length of the bond. As they see the UK economy crashing, bailouts not working, banks basically bankrupt, and lowering interest rates having no effect whatever, bond holders are obviously worried about the government's only last bullet - Quantitative Easing - which is VERY inflationary. Personally I would not touch long dated bonds with a barge pole - I would rather by a house!

Long term bond holders are obviously forward looking, over the full length the length of the bond. As they see the UK economy crashing, bailouts not working, banks basically bankrupt, and lowering interest rates having no effect whatever, bond holders are obviously worried about the government's only last bullet - Quantitative Easing - which is VERY inflationary. Personally I would not touch long dated bonds with a barge pole - I would rather by a house!

Gold in GBP is basically a down bet on the GBP. As Sterling goes down, gold goes up. Of course, this is a generalisation, but there is a strong correlation, as you can see from the charts. It depends on what you think the world's view of Sterling is! It seems to me, the more statements we have from the Governor of the Bank of England about a very severe recession, the lower BOE interest rates goes, and the more talk of Quantitative Easing, the higher will gold and silver go. But that is only my opinion, for what it's worth!