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Randall Herbert

United Kingdom Property Is Already In A Severe Bear Market

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United Kingdom property is already in a severe Bear Market

By: Ceri Shepherd, Trend Investor

When countries were back on the Gold standard it simply meant that money could not be printed at will by bankers or politicians, if the Gold to back this printing did not exist. The principle role of Gold was discipline. Nowadays none of the world’s major currencies are backed by Gold which means an unending stream of new money can and will be printed. The world is an unpredictable place but you can guarantee that Central Bankers will make certain that the paper money you hold as savings today will have a lot less purchasing power 1 year from now ,that is absolutely guaranteed. The Federal Reserve Bank is tasked with maintaining price stability, which is a paradox as the only way this goal can be achieved is by closing the Federal Reserve Bank! The argument is simple, every year they print new money which guarantees the destruction of purchasing power of existing money. Which leads to the market demanding more units of the newly devalued currency for products, which is called inflation which is the opposite of price stability.......................................Cont.

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Our author doesn't go far to explain what we would have done with our gold when we exchanged our house for it in 2004. He doesn't explain the cost of storing our gold, of accomodating ourselves in the meantime and is he calling the gold market now? At what point will we be able to stop paying rent & exchange our gold for a house again?

And having exchanged our house for gold in 2004, we would only have a fraction of that house to hold as gold, because we would have had to hand over some paper money to our lenders on sale of our house. So the bet would be more like 20% of the value of a house in gold, versus a house. Whilst on paper the bet would have been a winner, after throwing in the cost of rent & storage of the gold (insurance?). we can be sure that the bet was a dead loser.

In short, the author is imaginative, but ignores the practical problems associated with this theory.

Luckily for us mere mortals, when the bank lends us paper money, they only expect paper money in return, not gold. So whether it buys me more or less gold, I couldn't care less. But I could care whether my house will cover it's paper loan if I need to sell it.

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  • 302 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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