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London House Prices: This Could Finally Be It

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MSW has jumped the shark. Last year 60% of all London buyers were domestic while cash buyers plummeted. The primary cause of the gold crash was the liquidation of unbacked paper gold positions. Paper gold speculation was almost certainly driven into bubble territory by QE, but QE has helped elevate house prices all around the world and not just in London. More QE is inevitable, so too an alphabet soup of market distorting subsidies. While these continue London house prices are likely to maintain their relentless upward momentum.

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completely, utterly, totally wrong

Haven't they got a scary and completely, utterly and totally wrong chart for that?

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MSW has jumped the shark. Last year 60% of all London buyers were domestic while cash buyers plummeted. The primary cause of the gold crash was the liquidation of unbacked paper gold positions. Paper gold speculation was almost certainly driven into bubble territory by QE, but QE has helped elevate house prices all around the world and not just in London. More QE is inevitable, so too an alphabet soup of market distorting subsidies. While these continue London house prices are likely to maintain their relentless upward momentum.

What does that even mean?

Futures contracts are leveraged and unbacked. That's how miners sell their 'product', plus they stuff it into GLD (which they created themselves) to turbo boost their own investment bubble.

This paper v physical nonsense is just that. All commodities are traded on paper exchanges. Get over it.

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There's something in it, imo.

I suspect there were very few sellers of physical gold as well, when buy-prices hit £1,250 a Kruger oz/Eagle oz back in September 2011 at many of the main bullion dealers. They were all holding for even peakier heights. Don't know what the dealer's offer price would have been back then; probably buying price minus about £100-£150 per oz.

Buy price now at bullion dealers; between £940-£960 per Krug/Eagle.

PCL has topped out. Last opportunity for smart sellers to cash out, and the mugs to keep holding expecting further value gains.

Only a very few owners of a collapsing financial asset trade it for money at 90 percent of peak value.

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There's something in it, imo.

I suspect there were very few sellers of physical gold as well, when buy-prices hit £1,250 a Kruger oz/Eagle oz back in September 2011 at many of the main bullion dealers. They were all holding for even peakier heights. Don't know what the dealer's offer price would have been back then; probably buying price minus about £100-£150 per oz.

Buy price now at bullion dealers; between £940-£960 per Krug/Eagle.

PCL has topped out. Last opportunity for smart sellers to cash out, and the mugs to keep holding expecting further value gains.

I agree. If people are using houses and precious metals, or any other asset for that matter, as a store of wealth, the same rules apply.

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There's something in it, imo.

Maybe, maybe not.

I guess it depends upon how much of the gold crash is due to market manipulation and how much is due to changes in the underlying economic fundamentals.

If the former then I'd guess little effect; if the latter then the opposite.

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MSW has jumped the shark. Last year 60% of all London buyers were domestic while cash buyers plummeted. The primary cause of the gold crash was the liquidation of unbacked paper gold positions. Paper gold speculation was almost certainly driven into bubble territory by QE, but QE has helped elevate house prices all around the world and not just in London. More QE is inevitable, so too an alphabet soup of market distorting subsidies. While these continue London house prices are likely to maintain their relentless upward momentum.

Said with such conviction...but I don't buy either argument.

I suspect the percentage of foreign PCL buyers was greater than 40% last year - and even if it was not, that is still an extraordinarily high volume of foreign money.

The recent gold crash is as much to do with weak Marco economic data, and lack of Government QE promises as it was a surge in gold supply. And even surge of gold supply by government was the only factor in play, there is more bad news - because traders are pricing in the probability of further bailout terms being predicated on indebted governments selling their reserves of the yellow stuff.

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For PCL the chart seems to cover house prices above about £360,000 and a spot gold price above about $750 per oz - so that suggests it covers the period after about 2007.

That is referring to the ALL DATA GOLD PRICE chart from the link below

http://

therealasset.co.uk/charts-and-graph/gold-price-charts/

and likely there would be reasonable correlation in that period as the gold price went up at the same time as PCL house prices went up

http://

www.home.co.uk/guides/house_prices_report.htm?location=london&all=1

- that correlation does indeed seem to be reflected in moneyweek's first chart.

It's a bit of a shame that the 2nd chart isn't very clear as it's "rebased" for some reason but if it covers the period after 2007 then as house prices fell (outside of London since about 2007) at the same time as the gold price increased then that chart should approximate to an off vertical scatter at about 70 to 80 degrees maybe with a bit of a leftwards bulge at the top as the gold price flattened but it doesn't quite do either of those things.

Then the reason for the large amount of horizontal scatter near the "rebased" spot gold price of 90 isn't clear - but even so I suppose it is fair to say that the falling house prices outside of London didn't/doesn't correlate with the increasing spot gold price. After 2007 any sort of correlation for house prices outside of London would be a negative one.

It would have been interesting to see an analysis of the correlation of London/outside of London house prices with the spot gold price going back to say the 70s and 80s as well as during the early 90s recession.

Edited by billybong

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  • 244 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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