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Vivaldo

Uk Property Already In A Severe Bear Market

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gold investors seem to ignore that gold is also a speculative investment which bounces around like a whores knickers just like all other speculative markets.

they just happen to be arrogant enough to say that all other measures move around the constant that is gold.

Again I reiterate.. do not piss up my back and tell me that it is raining..

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This has been posted and crushed before:

Well maybe; but the fact remains that anyone who bought gold last year has seen their investment grow by more than 50%.

Not everyone adopts the mono-vision mantra that property is the only thing worth buying. Sensible investors spread their risk across several asset classes surely?

Edited by Red Baron

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Ridiculous, and I speak as a gold ETF investor.

Its arguments like these which give bears a bad name.

You could plot house prices against techology shares in 1998 - 2000 and say "Oh my god, theres a house price crash of 90%!" :blink:

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Ridiculous, and I speak as a gold ETF investor.

Its arguments like these which give bears a bad name.

You could plot house prices against techology shares in 1998 - 2000 and say "Oh my god, theres a house price crash of 90%!" :blink:

Yes quite. And your shares could now be used to insulate your cardboard box.

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:lol:

Today my chosen measure of HPI is hog bellies. I reckon the market is going to rally, thus proving house prices have crashed. Just have to get my local petrol station to exchange fuel for hog bellies and soon we will have a new currency to trade with.

<_<

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It seems to me that the only use for Gold apart from physical applications & jewellery is for speculation.

At some point DrB you'll have to turn bear on gold (as I will at some point turn bear on property). That gold graph is starting to look incredibly like the Nationwide graph and when it turns, it'll turn harder than you might expect. I see an emergence of a skies the limit feeling about gold and usually in any market the time to get out is shortly after that feeling emerges.

http://www.nysun.com/article/31847

$2,500 an Ounce Gold Coming Soon, Adviser Says

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It seems to me that the only use for Gold apart from physical applications & jewellery is for speculation.

At some point DrB you'll have to turn bear on gold (as I will at some point turn bear on property). That gold graph is starting to look incredibly like the Nationwide graph and when it turns, it'll turn harder than you might expect. I see an emergence of a skies the limit feeling about gold and usually in any market the time to get out is shortly after that feeling emerges.

http://www.nysun.com/article/31847

ah but will you turn bear on property before it devalues too much?

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I see an emergence of a skies the limit feeling about gold and usually in any market the time to get out is shortly after that feeling emerges.

erm... By that measure you should have been out of property about 2 years ago.

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erm... By that measure you should have been out of property about 2 years ago.

:lol::lol::lol:

For once TTRTR forgot to add " property is different".

Edited by Sledgehead

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Seriously, show me someone who says the skies the limit on property & I'll grant some respect to your comments. Until then, you're just making more bear remarks that have no basis in reality.

Ooh touchy! :)

(It seems that like most wind up merchants, TTRTR doesn't like it when people wind him up ;) )

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Why should the Dollar or Sterling be a better marker? They have less history as stores of value

The choice of ‘numeraire’ is a subjective one. Any asset return can be measured with respect to any other return. Just take the return on your asset and divide through by the return of your chosen reference asset. The most common one to choose is the risk-free return you get on leaving your money in the bank in your own country. If your investments outperform this you’re usually happy – you have made a profit in this world.

However, now say you’re valuing pension liabilities - you’d measure against the usual return available for the assets that you hold. For pensions this has historically been equities. So until a couple of years ago you measure against the average equity return as a numeraire for you calculations. Someone above was laughing at this, but until a couple of years ago, this is how your pension was valued! (they now use the yield on a AA bond)

If the only thing you do with your money is put in on deposit, then yes, fine use a cash account as your numeraire, but if the only thing you want to do with is buy property, you should use property as your numeraire. In this case divide you return by that of property (a very depressing thing to do for FTBs). So even though you have made a profit in the ‘risk-free’ world, you’re nursing a loss in the property world.

If gold has historically kept it’s purchasing power better than anything else in history, then measuring houses (and indeed your salary) against gold might be a good indicator of how far things have got from trend.

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The choice of ‘numeraire’ is a subjective one. Any asset return can be measured with respect to any other return. Just take the return on your asset and divide through by the return of your chosen reference asset. The most common one to choose is the risk-free return you get on leaving your money in the bank in your own country. If your investments outperform this you’re usually happy – you have made a profit in this world.

However, now say you’re valuing pension liabilities - you’d measure against the usual return available for the assets that you hold. For pensions this has historically been equities. So until a couple of years ago you measure against the average equity return as a numeraire for you calculations. Someone above was laughing at this, but until a couple of years ago, this is how your pension was valued! (they now use the yield on a AA bond)

If the only thing you do with your money is put in on deposit, then yes, fine use a cash account as your numeraire, but if the only thing you want to do with is buy property, you should use property as your numeraire. In this case divide you return by that of property (a very depressing thing to do for FTBs). So even though you have made a profit in the ‘risk-free’ world, you’re nursing a loss in the property world.

If gold has historically kept it’s purchasing power better than anything else in history, then measuring houses (and indeed your salary) against gold might be a good indicator of how far things have got from trend.

Gold may be an indicator of sorts But to me as an accountant I am only interested in yield becasue that is the true determinant of an assets underlying value. For property use rents. A sensible or fair valuation would be 150 times the monthly rent (equating to a Price Earnings ratio of 12.5 or 8% So if a property can be rented at say £650 per month (as in my own) then a fair valuation would be 150 x £650 = £97,500. Yet the property I rent is valued at £160-170k. 3 years ago it was valued at £100k so we can see how far upwards it has drfited from its fair value and also (more pertinently) how far prices have to fall for it to return to fair value. I will keep renting until common sense returns to the market

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How do you value gold?

frugalista

I'd say the same way you value any other asset - by the value of what you can exchange it for (whether you define that in goods or in currency).

One of the problems of valuing anything is that it is all relative - currencies float against each other, and there is no such thing as one true measure against which all things are valued. The value of something is simply defined by its exchange value, and the same is true of gold.

This may seem circular but there is no more fundamental explanation.

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I'd say the same way you value any other asset - by the value of what you can exchange it for (whether you define that in goods or in currency).

One of the problems of valuing anything is that it is all relative - currencies float against each other, and there is no such thing as one true measure against which all things are valued. The value of something is simply defined by its exchange value, and the same is true of gold.

This may seem circular but there is no more fundamental explanation.

Try going to the bank and asking for a loan 5 times your yearly income because you want to go and buy lots of gold, and see why more people invest in property - because that's the only way your average sheep can get lots of money to invest in anything expensive, despite gold being historically as least 'as safe as houses'

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Try going to the bank and asking for a loan 5 times your yearly income because you want to go and buy lots of gold, and see why more people invest in property - because that's the only way your average sheep can get lots of money to invest in anything expensive, despite gold being historically as least 'as safe as houses'

Actually gold is historically rather less safe than houses, having slumped far more severely and rapidly on several occasions. Maybe "your average sheep" isn't as dumb as you think...

"Gold bottomed on August 30, 1976 at $US 102, having fallen from a high of $US 195 set on the last trading day of 1974."

"Gold bottomed on June 21, 1982 at $US 296. This was the climax of the collapse from the $US 850 level which had been reached exactly 29 months earlier - On Jan. 21, 1980."

Edited by Magpie

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Actually gold is historically rather less safe than houses, having slumped far more severely and rapidly on several occasions. Maybe "your average sheep" isn't as dumb as you think...

"Gold bottomed on August 30, 1976 at $US 102, having fallen from a high of $US 195 set on the last trading day of 1974."

"Gold bottomed on June 21, 1982 at $US 296. This was the climax of the collapse from the $US 850 level which had been reached exactly 29 months earlier - On Jan. 21, 1980."

A poignant reminder. Furthermore I read somehere that new gold can be mined at $334 an ounce so at todays price its trading at twice what it costs to produce possibly due to relative market sentiment between gold and other asset classes.

A more interesting observation however is to look back to 1980 when it peaked at $850 an ounce. Then the Dow Jones was valued at 850. In other words one ounce of gold would buy one unit of Dow. By the year 2000 when gold was cheaper you could get 42 ounces of gold for the DOW index. Now in 2000 the ratio is still 17 ounces of gold to the DOW.

This should tell us something but I'm not sure what it is or whether its a meaningful comparsion. Does anybody else have views on this

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  • 301 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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