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No Point In Keeping Hold Of Money Now - Has Gordon Won?


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Well, if sterling loses 90% of its value overnight then your gold will become very valuable in sterling terms. Of course if sterling gains in the next few days, weeks, months etc. then your holding will lose value. When I say that, what i mean is it will lose value in stering terms, and that assumes you will at some point change back into sterling. If you are buying coins, as a hobby, investor, because you like coins, then it is less relevant.

My gold position was a spread bet of £200 for every dollar that the price of gold went up or down. It went up and I closed eventually. The point with spread betting is you are just betting on the actual price of gold in its base currency, i.e. dollars. You bet an amount per dollar movement. If you buy and it goes up 3pts then you win 3 times your stake. If it goes down then you lose 3 times your stake. There is no conversion from sterling to dollars or any other currency for that matter. You are betting on a number. IMO buying physical gold is too expensive and you run the currency risk. The same with anything dollar based such as oil, silver etc. etc.

Saying house prices have fallen in gold terms is no different to saying that until a few months ago they had fallen in oil terms. At the end of the day, you need to convert whatever you hold back into sterling to undertake a housing transaction in the UK (no doubt someone will come up with an exception). Gold is a metal like any other. It is not a currency.

Big if, does anyone really expect sterling to gain on anything any time soon? really?

Interesting idea though, a little risky for me, you must have balls of steel.

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They did indeed. Even after a recent substantial pull back, although I have been out now for ages. My point is there is too much irrational love of gold on here without people really understanding what they are doing.

mining sector did very well on Friday, up 10% (approx 1,000 pips) put it on your watchlist ;) , still down circa 60% since May 2007 mind...

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if you read my earlier post above you will see that when talking in dollar terms i said that over the year gold is up 4%. I fully understand why gold has gone from £450 to £600 per oz. Could there be a more perfect example of gold at work as a hedge?

sorry, just dashing so will reply to your other posts tomorrow, but my point is you would have been better off just converting from sterling to dollars than into gold

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Just caught up with this thread having been out all day - a few further points:

1. As sterling tanks, won't foreign investors come into the UK propery market, maybe propping up prices at some point?

2. Inflation, when it comes, will erode your cash value - this cannot be recovered once lost

3. Buy a property & it may still drop, for argument sake say 20%, but it will eventually recover, unlike cash

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sorry, just dashing so will reply to your other posts tomorrow, but my point is you would have been better off just converting from sterling to dollars than into gold

I disagree, buying gold when $2 was £1 was a great deal for us (buying from states) and now that gold is worth over £600 an oz because of the sterling falls. The thing about gold is that there is no point valueing it in fiat terms, for me it is a hedge and i don't have to trust any banks or governments or risk being left with pieces of paper.

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You contradict yourself. Gold is inflation proof that is why people buy it.

Why do people still trot out nonsense like this?

You're telling us that from 1980 to 2000, for 20 years, there was zero inflation? Is that what you're saying?

Edited by Red Kharma
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I disagree, buying gold when $2 was £1 was a great deal for us (buying from states) and now that gold is worth over £600 an oz because of the sterling falls. The thing about gold is that there is no point valueing it in fiat terms, for me it is a hedge and i don't have to trust any banks or governments or risk being left with pieces of paper.

:rolleyes::rolleyes::rolleyes::rolleyes::rolleyes::rolleyes::rolleyes:

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I'll second that. Do you think they have realised yet that if Sterling recovers against the dollar then the price of gold in £ will fall, even if the underlying price in gold doesn't? Oh no, of course not. Gold is its own currency. Just isn't used as a currency anywhere else.

Have a day off, how many countries do you know of that do not produce gold or silver coins? How many central banks do not have a vault full of gold? Even those like the chinese that have always kept their reserves as dollars have bought gold and are still doing so fiercly. The leading arab nation have been buying gold, $350 billion recently, and have agreed to implement a standard currency probably backed by gold. What is it that you know?

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Here is the problem, and it's not just concerned with gold, but gold suffers from it terribly -

It's buying something you don't want, can't use and have to look after purely because it might make you some money. there is something ******ed up with that somewhere.

ffs. Will you please refrain from saying things I agree with Injin?

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Does anyone else feel the same - such low interest rates mean there is no incentive to save or keep substantial sums of cash - might as well spend it before it is inflated away - on a house maybe. This means Gordon has won. Does anyone else feel the same way?

No. If you are saving for a house you are gaining approx 15-20% pa on your money even if your savings account pays 0%

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The problem (for you) is that the currency is crashing.

Future Sterling liability (house) matched to Sterling assets (cash, bonds or if you're feeling brave, equities). Where's the problem?

Those who shorted Sterling last year did well, and I take my hat off to them, but some are unwilling to indulge in currency speculation with their savings/STR funds.

Problems I see with currency speculation in 09:

1. How much downside remains in GBP v USD and EUR? If you want a Sterling priced house, you have to repatriate your cash at some point. RB has done well by crystalising his gains now.

2. PMs may achieve more

3. Can't think of any more at the moment :P

Monty

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Militaria / Medals is a good investment. A load of stuff has gone up by about 300 to 500% in 10 years. WW1 items will be particularly valuable in 5/6 years time. It will never lose its value and is good fun collecting. Will not be investing any more money in any financial institution for the next two years.

I have also collected militaria and medals for forty years. There is a bubble at the moment so buy with care. Prices plunged in the early nineties and are set to do so again. I expect my waterloo medals to drop by about 30% in value over the next couple of years. :(

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This first one is a great buy.Ex council but all now private.Very quiet and great house,its a repo,

http://www.rightmove.co.uk/property-for-sa...;maxPrice=70000

http://www.rightmove.co.uk/property-for-sa...;maxPrice=70000

Again ex council but nearly all private.Really nice houses these for a first time buyer.Bargain this one.3 miles from A1 9 miles from east coast main line.

http://www.rightmove.co.uk/property-for-sa...;maxPrice=70000

Another bargain.Again nice family area,pub 300 yards away.All above would rent for £450-£520 easily,large demand.

Interesting the first one i sold a house opposite last year for £105 grand id bought for my uncle to live in 12 years ago who died.

I'm in a different part of the country and run a very similar model to this - similar house prices & rental income. I was thinking of returning to the market and buying a few more properties in Feb 2010. But as you say - there are properties priced OK & demand out there now that you can run a business on.

Good luck if you jump in now.

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Militaria / Medals is a good investment. A load of stuff has gone up by about 300 to 500% in 10 years. WW1 items will be particularly valuable in 5/6 years time. It will never lose its value and is good fun collecting. Will not be investing any more money in any financial institution for the next two years.

Be careful making assumptions like that. Militaria is a dying hobby/investment much like cigarette cards, stamp and coin collecting. These things just do not interest the younger generations so expect prices to start falling unless you have something special.

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You contradict yourself. Gold is inflation proof that is why people buy it. Gold is not in a bubble, it may have looked like one until now but things have changed, it is now a hedge that will continue to increase in value. If you believe that inflation is coming then buying gold at even todays prices is still a winner since it can only go up in value. Premiums have increased for gold/silver but that is because of the lack of availability and the number of buyers. Wonder why that is?

Apply those thoughts to housing in 2006. This is deranged thinking, you focus on supply, the supply of gold is pretty much constant, it is demand from nervous Joey's and hedge funds riding the back o this nervousness.

You are also confusing the micro-macro situation. You say it is 'inflation proof' (macro) tnen say it is the supply/demand issue causing prices to go up. You are muddled.

As i stated earlter, gold only drops in value as the markets improve and people stop using it as a hedge/store of wealth. Again, do you see this happening any time soon?

This isn't true at all. Gold moves up in price when there is expansion of bank credit and growth, not down, see the graph below.

Why do people still trot out nonsense like this?

You're telling us that from 1980 to 2000, for 20 years, there was zero inflation? Is that what you're saying?

Indeed - it took over a quarter of a century for gold to recover to its 1980 high.

I've tried to gauge where there was recession/contraction and growth and inflation on the graph.

gld_hist1.gif

notice what happens in the contraction /recession to the price of gold

post-1857-1231073951_thumb.png

Edited by MrB
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Indeed - it took over a quarter of a century for gold to recover to its 1980 high.

notice what happens in the contraction /recession to the price of gold

USD750 in 1980 is equal to USD1870 in 2007 when adjusted for inflation, so it has only recovered by less then 50%

Given all the recent money injections, I think, gold can go up substantially. At the same time it seems that the yellow stuff bottoms at the same time as the housing market. That said, the gold might go up significantly this year but 2010-11 is a risky period imo.

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USD750 in 1980 is equal to USD1870 in 2007 when adjusted for inflation, so it has only recovered by less then 50%

Given all the recent money injections, I think, gold can go up substantially. At the same time it seems that the yellow stuff bottoms at the same time as the housing market. That said, the gold might go up significantly this year but 2010-11 is a risky period imo.

Agreed. This time last year I could buy 1oz krugers for around £450 on ebay and now they are selling for around £720. What else can be said?

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Agreed. This time last year I could buy 1oz krugers for around £450 on ebay and now they are selling for around £720. What else can be said?

You should be your own contrarian indicator. If you think something is a good bet because it is near an all time high and 'can only go up' to quote you - then I'm happy to be out.

450 to 720 is not an inflationary movement, it is a speculative movement.

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