Wednesday, January 7, 2009

When measured in gold, this is already the worst house price crash in history

Why you should hold on to gold

"I don't know if this sell-off in sterling has been orchestrated, but it suits the government. The economic downfall doesn't look nearly so bad measured in weakened sterling as it does in, say, dollars. House prices are down some 15-20% from the highs, depending whose figures you use, measured in sterling. But measured in gold, this is already the worst crash in history, as the chart below shows. [Chart 1]. What's more, this crash still has a lot further to go. In this chart, having risen by the most, London prices look set to fall by the most: [Chart 2]. My step-father doesn't like gold, because, he says, it doesn't pay any interest. I reminded him that tomorrow the Bank of England is set to cut interest rates again. Paper currency paying as much interest as gold, who'd've thought it?"

Posted by drewster @ 10:48 AM (1409 views)
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20 thoughts on “When measured in gold, this is already the worst house price crash in history

  • Ironically together with this article there is also a link which helps you recognise a ‘bubble’.

    From this article they imply some consolidation in Gold may well happen now before it takes off again.

    So perhaps worth waiting a few days if anyone’s about to buy.

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  • sold 2 rent 1 says:

    Gold mania to peak around Easter 2010

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  • I am bullish on gold but just have a very bad feeling about it.

    Something tells me that gold will rise then at some point for no real reason will drop like Tower Seven.

    Gold will return to its big owners at bargain bucket prices. I’m out!

    Those that are still in and have been for a while good luck, I may be wrong!

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  • crunchy,

    I expect gold will fall when central banks start raising interest rates again, or rather when the markets (bond & futures) price in the expectation of rising interest rates. The BoE might be forced to raise rates if there is a serious run on the pound (look at Iceland: 18% interest rates!), but the main action for gold is in the dollar market so it’s the Fed rates that matter. There’s no sign of any increase in dollar interest rates for the near future.

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  • Don’t even know how to buy it or the implications but I noticed the Platinum chart just starting to tick up, may offer better value than gold as a safe haven.

    See 5 year chart

    http://www.kitco.com/charts/liveplatinum.html

    Any opinions ?

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  • Dollar decline should have a nice effect on gold, then aus/nz crashes should help a little, then euro… I don’t know about 2010 easter peak, but i’m bullish for a while, as long as the fiat world is in increasing disarray.
    btw there was a reason for tower 7 – demolition charges!

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  • wealthyvagrant says:

    @str 2007

    Investigate palladium also. A few years back when they were designing catalytic converters platinum was the metal of choice as it was the cheaper of the two. They’re now being redesigned to use more palladium….

    But unless you think the contraction has finished, both may fall further until we reach a bottom…

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  • 4. drewster Thanks for that.
    5. str 2007 Platinum has shot up from $820 to 960 over the last 30 days or so.

    6. rumble said…btw there was a reason for tower 7 – demolition charges.
    crunchy- Silverstein… “so we decided to pull it”
    crunchy- There is no such thing as a conspiracy we live in a free market society where the weak go under and the strong keep a grabbing!

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  • 9

    You can say what you want here, so long as you choose your words wisely. lol

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  • nopensionnohouse says:

    Or instead of gold you could just hold US Dollars or Euros. The effect is / has been the same or better and arguably more liquid!

    Check out the bullionvault charts in various currencies.

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  • nopension – think that game might very well be up soon , perhaps after a final swing low (for sterling) or might be up already.

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  • @techieman: think you might be rightish, again.

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  • str2007 – from the linked “How to tell when a sector is about to crash”.

    How to tell when a sector is about to crash – “the legendary speculator Rick Rule, likes to say, “You’re either a contrarian or a victim.” ”

    versus “markets can be irrational longer than you can say solvent” – John Maynard Keynes.

    Both good economists but i wonder which would win…. there’s only one way to find out……

    FIGHT!!!

    – Rumble – i cant disagree with that!

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  • Techieman

    Your love of ‘you’ve been framed’ shows through.

    Good old Harry Hill.

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  • STR 2007 I have to laugh at something when the FTSE is going against me! :-). Otherwise i’d get indigestion!

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  • nopensionnohouse

    Excellent link, thanks for that one.

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  • nopension – yes dont support prices. In the UK rather than bailout the car manufacturers just sell the cars cheaper FFS! Yes yes default IS the option.

    I was in a good mood until i heard that idiot interviewer. (the man in the first section re the man in detroit – not the girl).

    Classic comment – “whenever there is an abbreviation like BRICs its a disaster” :-), “You have to buy the Tennis balls that bounce” – Oversold.

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  • If you are considering buying gold, do it because you wish to retain what you have, although it is possible that spectacular gains may be made – study ideas for a future stable currency when this current mess eventualy ends.
    Buy British gold coins post 1837 – No Capital Gains Tax
    This means sovereigns etc.
    Buy ‘Bullion Coins’ – by and a large avoid buying collectors coins.
    Buy proof sets etc.,only after you have worked out the gold value.
    Be very careful with ebay – there are lots of cases of counterfeit coins.
    Get familiar with sovereigns – know how to spot forgeries.
    Find yourself a bullion dealer who can provide coins.
    Keep your individual transactions below £10k a time.
    Study Hatton Gardens Metals website – quick guide to daily price of sovereigns, Krugs & Eagles.
    Daily Gold Fix price on Kitco site.
    Bullion Vault site gives a minute by minute updated price – various currencies.
    Work out where you are going to keep your investment.

    Avoid paper gold – most investments involving paper will turn to the proverbial in time.
    Gold is also a store of wealth and should be viewed for the long haul, but with interest rates going to the floor, I suspect many will be considering their options. Do some research. Above all – stick to sovereigns – it is a small piece of gold that is understood all over the world.

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  • thanks for the info greytornado

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