tinecu

Hmm. As someone quite keen on a MAJOR correction in the housing market, I was alarmed to see this story about the return of (very cheap looking) 90% mortgages.

 

http://www.guardian.co.uk/money/2008/dec/0...tgages-property

 

I know many on here will be pleased to see this! I wonder how long it will last and whether this is a 'dead-cat' bounce in their availability or whether the banks are accurately assessing prices won't fall massively further from here? Or whether it is just a 'teaser' with only a small amount of funding available and most people being herded into more expensive mortgages?

So they will lend 90% of the lender's valuation.

If the valuation comes in at 40% off the 2007 peak... I wonder if the sale will go through at all.

Banks are now justifiably backing bargain hunters...lower risk.

However, there is a real risk of a bull trap.

The next US-carmakers black swan could push XPT below XAU. Time to buy?

 

I'd still prefer Pd. Pity that VAT is on all this stuff. FFS, doesn't Gordon want inflation & consumption? Should get rid of VAT.

Set up your own investment holding company and get VAT registered....then claim it all back.

Its a faff but probably no more difficult than setting up a GoldMoney account!

News: Land Registry Figures May Underestimate Price Falls

Mon, 01 Dec 08

The Land Registry has been criticised for underestimating the scale of decline in house prices.

Its latest figures, for October, show an annual 10.1% fall in house prices.But as they do not include sales from repossessions and auctions, which are on the increase, they may not be presenting an accurate picture.

http://www.home.co.uk/guides/news/story.ht...ate_price_falls

House prices: How low can they go?

 

"As with many properties on the market this year, the sale of Hedgerow Cottage at Barrington, Somerset, has turned into an agonising Dutch auction. In the summer of last year, the four-bedroom detached house was on the market at just over £500,000.

 

That was always over-ambitious, says Andrew Perry of Greenslade Taylor & Hunt (01460 57222), who took on the property in April at what he regarded as a more realistic price of £475,000. Nevertheless, he never imagined that he would still be trying to sell the property in November, now with its price slashed to £395,000 – exactly the same price for which it sold for new in March 2005. "

 

20% in just over a year, some of these properties fuelled by city money will be hit hard. South West UK already leading the % drop tables.

 

"One who thinks so is Jonathan Davis, chartered financial planner with Armstrong Davis and spokesman for the cult website www.housepricecrash.co.uk, where those who stayed out of the property boom go to gloat. A few months ago, commentators on the housing market were lining up to pour scorn on his dire predictions. Kirstie Allsopp even called his website "sick". Now, Davis admits he has been wrong about the housing market – but only in as much as it is in a worse state than he had thought.

"In April 2007 I said I thought prices would fall by 25 per cent from peak to trough," he says. "By October 2007, I increased that to 35 per cent. Now, I think prices will fall by 40 to 50 per cent, and the market will not reach a bottom until 2011."

 

Davis has come up with a new theory on property prices. "Historically, London property has tended to be advantageously priced when the average home is worth 300 ounces in gold," he says. "That has been true for decades. Take the early 1990s crash, for example. In 1993, when the market in London reached the bottom, gold was worth about £225 an ounce. Three hundred times that is £67,500, which is about the same as the average London property at the time. At the moment, gold is around £575 an ounce. Three hundred times that is £172,500."

 

By contrast, the average London property in October, according to the Land Registry, was £328,927 – suggesting that, according to this theory, prices have a long way to fall, unless, of course, the gold price rises. So should we all be waiting for the moment that the average London house price is aligned with 300 ounces of gold, and then pile in? It isn't that easy, he says, as gold prices tend to work on a 20-year cycle and property on an 18- to 20-year cycle. In any case, Davis believes, it might be worth hanging on to your gold. "In spite of the falls this autumn, the gold price is on a long-term bull run, which started in 2000."

 

Pity HPC'ers didn't like us to talk about it though on their site!!!

 

SafeBetter

Well I never!

Goldfinger should have been cited IMO.

Funny. I immediately thought about buying!!

Me too!

I had my finger on the trigger...

 

Wow Ker was right!!!!!

I saw it too...WTF was it?

$796 now...Golds got legs today folks!

http://www.telegraph.co.uk/finance/persona...-time-high.html

Demand for gold at an all-time high

Demand for gold reached a record high in the third quarter as investors sought refuge from the financial crisis and volatile stock markets, according to the World Gold Council.

The 10 year one is interesting.

 

 

The non-US$ version doesn't have the large price bump/fall, and looks much more like a steady trend.

 

 

from: http://www.greenenergyinvestors.com/index....ost&p=77145

I like this KGX indicator too...

TA of this would make more sense to me.

I agree with what you say, just am curious as to why TA chartists always just use the USD.

Yeah, I was wondering that too. This has always been TA's fundamental weakness IMO.

Whoa Gold smacked down to $716.90....

All charts: see link in my sig.

Assuming the implied linear correlation holds:

P[Ag]=0.023xP[Au]-2.8 (or thereabouts)

When Au=$10,000/toz then Ag=$230/toz (43:1)

It used to be between 1.5 and 2% over london fix, depending on quantity. He told me already the premium will be higher. I'll find out in three weeks time.

Hmm. Not ideal ( I don't like surprises). Good luck!

If it's 4% over fix I guess you might as well use Goldline/Bairds.

Absolutely. We're in the right one. I don't think it will last longer than 1-2 years. Could be much shorter indeed.

Yep. Like the GPS going haywire mid-voyage. You don't change course, just keep following the compass. What does the chart look like without log/log vertices?

Nice chart. I've always liked this approach since you first introduced me to them on HPC before the madness over there.

But aren't we in the land of 'aberrations' right now?

IMO the whole PM maker right now is an aberration. "Don't believe the hype"

As far as I am experiencing, there is no gold market right now due to a shortage.

 

There is a bloody 3 weeks waitlist to get the kilo gold bars I want to buy with the significant profits of my option "hobby". Not ounce wafers or coins, kilo gold bars! 3 weeks!

 

To add insult to injury, the sonofabitch gnome of Zurich won't lock the price in. I had to pay him an advance just for the privilege of being given the opportunity to buy at whatever the price will be in 3 weeks. He says it's because it's become "difficult to hedge on the futures market".

Indeed there is no real market anymore in gold, equities or bonds as far as I can see, since government 'funny money' came in to play.

How much cheaper is gold buying through your gnome than say Goldline for a 1kg bar? The wait seems to be the same.

Nothing to do with JET at Culham, by chance?

(fusion sustained!??)

Nah. Making Aluminium Nitride. Actually I think the JET would be really pleased to get more energy out than they put in!

Nah, the red line is more like it.

 

Oh boy CG never did mince his words!

My understanding is that THERE IS NO MARKET RIGHT NOW due to manipulation. Charts are just smoke and mirrors until the powers that be stop mucking around with the market.

So we might as well be looking at chicken guts to predict the price of gold.

All our cherished economic rules, metrics and methods go out of the window in times like this.

I recently ran a large scale high temperature experiment. The reaction ran away so that the temperature soared. We all got really scared because we couldn't shut it down. Folk were panicking but then the thermocouple indicated that the temperature was falling. Phew it must have burnt itself out, we thought!

5hrs later the whole reactor melted, spreading molten ceramics around the factory. Picking over the wreckage a few days later when it had cooled we found the thermocouples has burned out long before the final meltdown.

Luckily no-one was hurt, but the take home message is clear. When conditions get extreme your trusted indicators can be worse than useless.

This sold house price data is a lagging indicator but so far big falls have not happened in London:

 

http://www.home.co.uk/guides/house_prices_...&lastyear=1

 

Asking prices are leading indicator and the median figures show stagnation....

 

http://www.home.co.uk/guides/asking_prices...&lastyear=1

 

Looking at the sales volumes though I expect sellers will cave soon enough.

Hang on a minute....

In posh areas like Chelsea and Knightsbridge house prices are collapsing...

http://www.home.co.uk/guides/house_prices_...&lastyear=1

http://www.home.co.uk/guides/house_prices_...&lastyear=1

Obviously nearly all sales are flats.

This sold house price data is a lagging indicator but so far big falls have not happened in London:

http://www.home.co.uk/guides/house_prices_...&lastyear=1

Asking prices are leading indicator and the median figures show stagnation....

http://www.home.co.uk/guides/asking_prices...&lastyear=1

Looking at the sales volumes though I expect sellers will cave soon enough.

Yeah, pro constitution anarchists

 

It's quite funny reading really. And shows what the common world view is like.

For 'anarachist' I read 'pro-libertarian anti-statist' and their arguments usually make more sense...

Fiat is statist thieving IMO.

It seems the only way to explain the fact that *everything* is going down, except the dollar.

 

I sometimes have to pinch myself to make sure I'm not dreaming, because everything I thought I'd 'learned' over the last few years seems to be going out of the window. Either I'm going insane (always plausible) or the financial world has gone mad. One or the other.

 

Ok, maybe both.

 

But I'm fortunate enough to be psychologically prepared for all this. I've had inverse-Midas touch all my life, so whenever I get involved in something it's a pretty safe bet that it'll go wrong somehow. So having finally bought into gold & silver in the last six weeks, I knew in my bones that I had to be genuinely prepared for half of that (paper) money to disappear. Or, as I now prefer to think of it, be prepared to face up to the fact that the same cash might soon buy me twice as much shiny 'protection'.

 

As Chris Martenson points out in Chapter 20, you have to weigh up the balance of probabilities in all actions you take, and factor in your personality. In this case I was genuinely prepared for financial Armageddon and its consequences, and the short term cost in this instance has definitely been worth it for me. Especially as while Armageddon may have been put on hold, it's a safe bet that the fiscal muzak being played down the line isn't going to placate that awkward customer forever. Even if it hangs up, the underlying issues still exist, and farming out the call centre to Asia won't help. Even they have limits to their patience. So my instinctive move into PM insurance still feels sound, even if my timing could have been better.

 

It was ever thus!

 

So now my mindset has shifted on to the next chapter. I cannot alter the past (not unless Dr Bubb is related to Dr Who), and I'm glad Armageddon has been postponed. Perhaps indefinitely, but probably just to be replaced by Arsageddon... which is like Armageddon only all the action takes place below the waist, out of sight, and involves the taxpayer and nowhere near enough vaseline.

 

I am now watching gold & silver with renewed interest, hoping they'll head south faster than sterling so I can continue to fill my Lego Fort Knox with something which still feels safer -- perhaps totally irrationally -- than the electronic sterling which lands in my bank account every month. I may only end up with the heaviest Lego castle in the UK, but in less than 40 years I'll probably be worm fodder. At least I'll leave something interesting behind... assuming I haven't bartered it all away for firewood or been locked up for refusing to hand it over to the the New World Disorder. :-)

 

Andrew McP

So true, so true!

Cheers Andrew

some more analysis:

tomorrow we might have a bear market rally to retest the 820 and monday / tuesday start the downtrend to lows

Blimey. It was always forecast as a WILD RIDE! Buckle up folks!

As a person who has put some money into gold (and silver) largely because of the confidence of many people on this forum (and other places), it's all a bit nerve-racking.

 

I can more or less understand the reasons why PMs may rise substantially in value in the future, but I'm sure someone could present me with reasoned arguments why PMs will fall in the future (short-, medium- or long-term), and I would be equally easy to convince. The movements of silver and gold lately are just a complete mystery to me. It seems like everything in the world is just worth less than it was -- whereas, in my simple model of the world, some money must be flowing into something and increasing that something's value, and I assumed that would be gold and silver...

 

Basically, I lack the conviction of my own well-thought-out position[1] to be sure I'm doing the right thing. In some ways, it would certainly be a relaxing thought to know I'm just getting my 5 or 6% from some savings account... even if that means I'm only really breaking even.

 

If I were to come out of PMs altogether, I might regret it if we have rampant inflation[2]. Moderate inflation wouldn't be too bad with some money in index-linked savings. If we have deflation, then cash will be okay, won't it?

 

If gold does go back to $700 (and an appropriately lower value in GBP), then -- especially given the horrible things that have happened and are happening in silver -- that would just about scare me off I think... and if I'm destined to be scared off, then I may as well be scared off sooner rather than later, because my losses will be lower!

 

If only I 'deeply and fundamentally' understood (and importantly believed) that PMs can only really go one way over the next couple of years or so...

 

Sorry about the negative vibe I've been putting out lately. I know it doesn't quite go with the 'rah, rah, gold is great' thing!

 

[1] Because I don't have a well-thought-out position at all.

 

[2] I'm not sure I could predict what would happen (or even what it would feel like) to live in hyperinflationary times, so I can't say whether it would make sense to be 100% in gold under those circumstances. Do the 100%ers think that a few sovereigns will save them? I find it hard to know what would be left of civilisation by then, and what having a few gold coins would do for the cause...

I share your pain.

But remember its an insurance policy, you hope you never need it.

Good question, would I be right in thinking the first one of these 'big' drops was shortly after the DOW started its big drop a few weeks ago? Safe to say the crashing dow is triggering the sell offs as value is lost from stocks and assets are the next best alternative.

 

Will this go on for as long as the DOW crashes? Perhaps not.. In Chris Martenson videos, he points out that human nature always go for and consume/deplete the plentiful, easily available and most rewarding resources first. I guess we might have a kind of reverse of this situation, in that PM being the most plentiful and easily off-loadable assets are sold in the 'first wave', before the more tricky to offload assets are sold. Perhaps we're are also seeing a bit of the 'Dont Panic, Panic First' mentality in selling PM while the price is near the top.

 

That doesnt by itself help spot the bottom, but if we know what other difficult to sell things leveraged institutions have, watching for a sell spike in these could signal that the easy stuff is all gone, and its a good time to buy. I havent a clue what these would be though!

http://www.fxstreet.com/news/forex-news/ar...91-92e302683295

This news certainly didn't help commodities and PoG today....core CPI level.

Edit: to make sense