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Something I've been meaning to analyse is a UK House Price in Gold 'Offest' - the idea here is that you buy your house at the absolute bottom using the smallest deposit possible and hang on to your gold positions as both houses and gold rise in value.

 

Initially I didn't understand why you were going through all those calculations when you'd first posted house prices in oz of gold.

Then i realised :rolleyes:

 

You're saying:

 

1. Buy a house using fiat at some time.

2. Later sell your gold (or some) and use the money to pay off any mortgage.

 

I hope that's right.

Interesting idea :D

 

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Am I really first to post this? Redeem 100gram bars from your Goldmoney account 2.75% premium: http://goldmoney.com/en/redeem-gold.php

 

No, Mongoose got there first.

Also you will notice that 100 gram bars are 4% premium, 1000 gram bars are 2.75%.

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Also you will notice that 100 gram bars are 4% premium, 1000 gram bars are 2.75%.

 

 

just tried a trial run of the gold redemption process and delivery is £25 per kilo or part thereof. Poor value if you just fancy redeeming a 100g

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Why not buy silver? The gold:silver ratio has just dipped back below 65, possibly on its way to <50.

http://stockcharts.com/h-sc/ui?s=$GOL...id=p35412651819

I like the look of silver too. Just waiting for it to dip a little before buying again. Gold looks solid above 900. I doubt whether deflationary fears will affect the price too much as in the wake of QE it is being bought in large part as a currency.

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Nice action in silver today, offset, for gbp holders, by dollar weakness. I've taken to checking USD GBP more than I check PM prices.

 

Not long before there is an inflationary consensus IMHO, at which point we'll leave $13 behind for good.

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You're saying:

 

1. Buy a house using fiat at some time.

2. Later sell your gold (or some) and use the money to pay off any mortgage.

 

I hope that's right.

Interesting idea :D

 

Yep, correct - whatever you do buy the house at the bottom even if the average house is still above 100oz gold, but put as little money down as you can as the last leg of the gold bull coud see house prices and gold rise together (as they did in early '77 to late '79) and peak about the same time.

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I like the look of silver too. Just waiting for it to dip a little before buying again. Gold looks solid above 900. I doubt whether deflationary fears will affect the price too much as in the wake of QE it is being bought in large part as a currency.

Look's like it's time to get out of dollars.

 

Dollar Rally Will End, Rogers Says; May Short Stocks

 

 

 

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Gold not far off entering it's summer doldrums and dollar index looking very oversold on daily and weekly charts:

 

Dollar Index (daily)

 

Dollar Index (weekly)

 

P&F chart also has a bullish price objective of 112:

 

http://stockcharts.com/def/servlet/SC.pnf?...,P&listNum=

 

 

I don't know if gold will go much higher if the dollar starts strengthening - seasonals in USDX says that it should get stronger from here.

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Gold not far off entering it's summer doldrums and dollar index looking oversold on daily and weekly charts:

 

Dollar Index (daily)

 

Dollar Index (weekly)

 

P&F chart also has a bullish price objective of 112:

 

http://stockcharts.com/def/servlet/SC.pnf?...,P&listNum=

 

 

I don't know if gold will go much higher if the dollar starts strengthening.

yep it may strengthen short term

 

but looks undervalued to me

 

http://www.howestreet.com/articles/index.php?article_id=9397

Gold isn’t going to $2,000 an ounce.

 

Before you gag on your coffee or suffer chest pains, allow me to explain.

 

We’re about eight years into the bull market, and gold has breached the $1,000 level twice and has spent weeks trading above the old high of $850. Some observers are now saying that gold’s pretty much had its day and that once the recession is over, it will retreat for good.

 

However, the four-digit gold price we’ve seen so far is with no price inflation to speak of, no effects of the atrocious increase in the money supply, and despite a rising dollar. What happens to gold when each of those pictures gets turned upside down – high inflation, excess cash jolting the economy, and a falling dollar? After all, gold’s performance to date has been powered only by general anxiety, not by any visible erosion in the dollar’s value.

 

I decided to take a fresh look at calculations that could be used to appraise gold’s upside potential. No one of them, by itself, comes with compelling logic. But they all point in the same direction.

 

Gold’s Percentage Rise in the Last Bull Market. What if gold in this bull market repeats the percentage rise in the last bull market? In the 1970s gold rose from $35 to $850, a factor of 24.28. Our low in 2001 was $255.95. Multiply that by 24.28 and you get a gold price of $6,214 per ounce.

 

U.S. Gold Holdings to Money Supply: The M1 money supply consists of currency and checkable deposits. The U.S. government currently holds 286.9 million ounces of gold. If the government were to make each dollar redeemable by the amount of gold it possesses, we’d arrive at the following price for gold: $1.569 trillion ÷ 286.9 million oz. = $5,468.80 per ounce

 

Gold/Dow Ratio: The ratio was about “1” when gold peaked in 1980, meaning the Dow and gold were the same price. To restore that relationship at today’s stock prices would mean when the Dow is at 6,626, gold should be at $6,626/oz. Of course, we think it likely that the Dow will get a lot lower before gold peaks. But even if it drops all the way to 4,000, that would imply a gold price of $4,000/oz.

 

All the Money in the World vs. Gold Reserves: If the public eventually sees the paper game being run by the central banks for what it is, governments will be forced to back their currencies with gold (and perhaps other tangibles like silver). Assuming they had to go into the market and buy the gold needed to restore faith in their currencies, the numbers might look like this: Total central banks reserves (including gold holdings) = $4.8 trillion, divided by 929.6 million ounces total gold reserves held by all official institutions that issue currency = $5,246 gold price.

 

U.S. Gold Holdings to U.S. Foreign Trade Deficit: The size of a country's deficit or surplus would be of no consequence if all currencies were convertible into a fixed amount of gold. However, the dollar is increasingly considered a hot potato, and when the trade balance reverses, as it must, dollars will flow back to the U.S. and fuel domestic price inflation. Based on the cumulative trade deficit of $9.13 trillion (up from $6 trillion since June ‘07!) and U.S. gold holdings of 286.9 million ounces, the corresponding price of gold would be $31,822 per ounce.

 

U.S. Gold to U.S. Government Liabilities: Finally, the GAO (Government Accountability Office) calculates an income statement and balance sheet for the U.S. government. As you’d suspect, it is dominated by future liabilities for Medicare and Social Security. What if they had to be backed by the supply of gold? Official U.S. government liabilities now ring in at an incredible $55.2 trillion. To make good on that would require a $192,401 gold price.

 

No, we don’t think gold will hit $192,000 or even $32,000. And there really isn’t any surefire way to forecast the eventual high. But it’s clear that every weathervane is pointing in the same direction. So, yes, gold isn’t going to $2,000; it’s going higher

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More gold ramping!

 

Gold’s Percentage Rise in the Last Bull Market. What if gold in this bull market repeats the percentage rise in the last bull market? In the 1970s gold rose from $35 to $850, a factor of 24.28. Our low in 2001 was $255.95. Multiply that by 24.28 and you get a gold price of $6,214 per ounce.

 

Hmm - that was when it was cut loose from it's fixed rate to where it spiked for just one day in January 1980 - the average gold price for January 1980 was $675.

 

I'm not a fan of Jim Rogers and I'm still expecting a significant gold correction if equities have a monster bear market rally (cyclical bull) which lasts until the end of the year or early next year back to the previous highs. Yes, I know everyone is going to think I'm crazy and nearly everyone probably thought this was a crazy idea at the beginning of 1975. If anything this seems more likely to happen today as inflation is low and interest rates are low - the final leg of the of the equity bear market will have to begin at some later point and that's where I see gold taking off again.

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I sent a quick message to GM the other day regarding vault locations in other places besides London and Zurich, and this is their response. FYI.

 

A GoldMoney Administrator wrote on 2009-May-12 12:03:23 GMT:

 

Dear xx xxxxx,

 

Thank you for your message.

 

I have forwarded your e-mail onto the relevant department and I assure you that we are aware of the advantages of establishing further vault locations to GoldMoney.

 

Thank you for taking the time to contact us and express your ideas, it is appreciated.

 

With kind regards.

 

 

James Mitchell

GoldMoney Support Team

Telephone Number: 011 44 1534 511977

 

----------

 

Holding xx-xx-xx-x wrote on 2009-May-12 00:00:03 GMT:

 

Dear GM,

Although I am very happy with the services that you provide for customer, I would like to make a suggestion: would it be possible for you set up additional vault locations in other countries?

Perhaps this has been suggested to GM before by other customers but it is worth making the point for those who would like to diversify risks (geo-political, economical etc) without leaving the excellent facilities on on offer here at GM. I believe some of your competitiors are offering storage facilities in places other that London or Zurich so it would make sense to maintain your company position as a pioneer in allocated Gold and Silver storage services. Offering vaults in countries in the Middle-East and Asia would be an great step in that direction. I was personally thinking about either Hong-Kong or Shanghai. Anyway I hope you take my suggestion onboard. Thank you for your time.

 

Your faithfully,

xxxxx xxxxx

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Gold not far off entering it's summer doldrums and dollar index looking very oversold on daily and weekly charts:

 

Dollar Index (daily)

 

Dollar Index (weekly)

 

P&F chart also has a bullish price objective of 112:

 

http://stockcharts.com/def/servlet/SC.pnf?...,P&listNum=

 

 

I don't know if gold will go much higher if the dollar starts strengthening - seasonals in USDX says that it should get stronger from here.

Surely seasonal patterns should be thrown out the window with what is going on this year. Never before has there been so much QE in effect.

 

I think gold is just about to be breaking out above a $1000, the next few weeks is your last chance to buy below £1000 I believe.

 

 

 

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Surely seasonal patterns should be thrown out the window with what is going on this year. Never before has there been so much QE in effect.

 

I think gold is just about to be breaking out above a $1000, the next few weeks is your last chance to buy below £1000 I believe.

 

Doesn't make any difference as I see it, markets are irrational a lot of the time - inflation lags the increase in money supply so it may not show up for at least another year, maybe longer. Most people (and some traders) don't know about the potential gold bull that is set to last several more years, they have no idea of cycles just what they see on a day-to-day basis - I know it, you know it but the masses that drive the market to the new highs don't know what's going to happen until much later (just like house prices....)

 

For gold to go much higher than £1,000 there needs to be more buyers coming into the market and those are likely to be new investors, like some people reading this thread perhaps who are educating themselves but have no gold positions yet. Without more demand then prices cannot go any higher than they are and that new demand I think needs to come about when less savy investors can actually see inflation going up - just like house prices, when prices start to move up more and more people take notice until you get to the mania phase, the best part.... for us :lol:

 

Look at the inflation stats below and remember what happened to the POG from December 1974 to August 1976:

 

http://swanlowpark.co.uk/rpiannual.jsp

 

We've not got anything like this at present - if you inflation adjusted the 42% nominal fall in gold prices in the above period I would hate to think what in comes to in real terms.... so far gold is holding up despite the SM rally which is good but I really can't see it going higher if the SM does what it did from December 1974. Gold up, stocks down, gold down, stocks up - that's how it seems to go. Hopefully really good buying opportunities ahead if enough people pile back into the SM and take it back near to it's 2007 highs (could happen!).

 

Found this which was a fit of fun as well:

 

http://www.bankofengland.co.uk/education/i...eline/chart.htm

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Look's like it's time to get out of dollars.

 

Dollar Rally Will End, Rogers Says; May Short Stocks

Maybe. If I was mostly in dollars, I would be concerned. For now, I think I will hold onto the dollars I have on the chance we will see another spike in the dollar. This rally in the markets represent nothing real and is driven by pure speculation. When economic realities hit we should see another sell off. That would be the time to get out of dollars when they are strong not weak. This payday, I will buy more because they are looking cheap at the moment.

 

I agree, there will be an eventual currency crisis. But before we see it we may see another deflationary episode where everything [minus gold perhaps] sells off, equities and commodities included.

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More gold ramping!

 

 

 

Hmm - that was when it was cut loose from it's fixed rate to where it spiked for just one day in January 1980 - the average gold price for January 1980 was $675.

 

I'm not a fan of Jim Rogers and I'm still expecting a significant gold correction if equities have a monster bear market rally (cyclical bull) which lasts until the end of the year or early next year back to the previous highs. Yes, I know everyone is going to think I'm crazy and nearly everyone probably thought this was a crazy idea at the beginning of 1975. If anything this seems more likely to happen today as inflation is low and interest rates are low - the final leg of the of the equity bear market will have to begin at some later point and that's where I see gold taking off again.

I wonder if gold might just hover and move sideways now that investors and nations are concerned about the future impact of QE on currencies. I see gold as effectively "monetized" with investors increasingly perceiving it as a currency not a commodity. The volatility we saw in gold was due to being perceived by most as a commodity; with inflation it went up, with deflation it went down. Now gold, as a currency, might become a lot less volatile [the recent rise in gold only reflects a weak dollar]. Think of all the investors lining up to buy gold once it dips below 900, this will provide a floor for the price. There is no ceiling as yet, and as currencies weaken in a year or two, gold will double.

 

As for the markets, the longer and higher the rally goes the larger the fall will be. The only way it will not fall is if inflation gets well and truly out of the bag, but I still see the forces of deflation trumping inflation in the short/medium term. You say inflation is low. Yet if it remains low this will work against the price of equities rather than support them. The main reason investors are buying equities is for inflationary concerns, and if these fail to eventuate we are likely to see a sell off.

 

imo the cheapest ways to acquire gold now is to either wait for a dip, that may not come, or buy silver on dips and swap for gold on spikes when the ratio closes.

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Yep, correct - whatever you do buy the house at the bottom even if the average house is still above 100oz gold, but put as little money down as you can as the last leg of the gold bull coud see house prices and gold rise together (as they did in early '77 to late '79) and peak about the same time.

 

This reminded me of a post I made back in 2007 :blink: :blink: :blink:

 

Luckily I managed to track it down without too much effort.

Unfortunately I rather think it annoyed Frizzers, and DrBubb disagreed with me.

 

Here is a copy of my post:

 

=================================

=================================

 

Frizzers,

Your Gold/UK House Prices graph has got me thinking about something which has been nagging in the back of my mind for a while.

It started when I saw how currency traders analyse the crosses. And your graph gives me the opportunity to think about it and write it down.

 

It occurs to me that traders often assume that there is a trading relationship between x and y. For example, when looking at the GBPNZ$ cross.

Now, I've started to think that that is not always the case. With the GBPNZ$ cross for example, there may be very little trade between the two currencies. Instead the rate is determined by the GBP relationship with a number of currencies, and the NZ$ is likewise affected by another collection of currencies. The resultant cross rate may therefore be not based on direct trading between the two currencies, but instead just reflects what has been going on elsewhere.

 

In analysing any investment/speculation it is therefore dangerous to assume that there is simple trade going on, and that chart analysis can be employed to explain the behaviour of the chart.

 

Considering your Gold/UK House Prices graph, it occurs to me that you may be tempted to analyse that graph in order to predict the best time to move back from gold to owning a house. This is why I think that is not the best technique.

 

I think the gold-houseprice cross is not a traded pair. Instead, each is influenced by various factors.

 

For house prices, the factors are something like: Employment, Salaries, Mortgage Rates, Housing Population, Number of Housing Units, Rental Income, and Sentiment :)

 

For Gold it is something like: Supply, Demand, and Sentiment :)

 

And because house prices are measured in the local GBP currency:

 

Local currency is affected by: Interest Rates, Trade (imports/exports) and Sentiment :)

 

Therefore it seems to me that to predict the best time to buy a house in the UK with gold, you need to analyse the above charts separately, and combine those results.

 

I guess I am pretty sceptical when it comes to any "magic bullet" which claims to enable me to beat the market. I think it is the natural human condition to see patterns where none exist, and to invent superstitions. But, I am always open to being convinced, and eager to learn.

 

For example, I came across the use of the Fibonacci Series in Forex trading. My instant reaction was to doubt it. So I did some research.

Initially my doubts were confirmed. For example:

 

Forex Trading - 4 Common Myths Guaranteed To Make You Lose

http://onlbusiness.blogspot.com/2007/07/fo...guaranteed.html

 

The Fibonacci number sequence.

 

This was actually based on the copulation of rabbits and had nothing to do with finance, but was hijacked by the investment community.It actually predicts nothing in financial markets and the levels break as often as they hold - If you dont believe this try and see how quickly you lose your money.

 

But then I came across this article:

 

Forex Expert Edward Ponsi: Fibonacci: Debunking the Debunkers

http://www.onlinetradingacademy.com/lesson...ns20061121.shtm

 

The fact is this: Fibonacci doesn't work well on the Dow because it is not a part of the "culture" of stock or index trading. Stock traders don't generally use Fibonacci, and therefore it doesn't work in the stock market. This is because Fibonacci works as a self-fulfilling prophecy, much like the use of Pivot Points in the futures market.

 

When you think about it, Pivot Points are a random calculation – the reason why they work is because so many futures traders use the same calculation, and therefore they come up with similar support and resistance levels. If enough traders place their orders at the same pivot point level, that pool of orders can cause the price to stop falling (or rising) when it reaches that level. This is the essence of a self-fulfilling prophecy.

 

So, I guess the conclusion is that some/many of these analysis methods only work because many traders use them. They do not have an inherent truth.

 

 

In summary:

1. You can't chart a non-tradable cross

2. Be sceptical

3. Sentiment is the one common factor to all markets :)

 

 

I love the complexity of this subject. I'm not trying to "teach my grandfather to suck eggs". Just thinking out loud, and hoping for more insight from your replies :)

 

I will value the views of anyone with a long-term good track record of investment 10x times more than I will value my own views, and will always try to understand and learn, but I will always question everything.

 

Steve

 

=================================

=================================

 

from: http://www.greenenergyinvestors.com/index....ost&p=24437

 

If you are correct, which you may well be, then as you say, just looking at the price of houses in oz of gold does not give you the best tine to buy, given that you can buy first in fiat and not gold.

Personally I still think predicting each market separately can give you a better quality prediction.

 

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yep it may strengthen short term

 

but looks undervalued to me

 

http://www.howestreet.com/articles/index.php?article_id=9397

 

There is an important factor here which I only recently appreciated.

Those calculations are for the gold price today, not tomorrow, not next week, not next year, and most definitely not in 5 years time.

 

The actual final price depends very much on what happens between now and the peak. If they increase the contributing numbers, the final price will be much higher some time in the future.

 

And that's not ramping, that's plain cold hard facts based on previous "gold accounting" periods. ie based on history :D

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So if I'm understanding you correctly, Steve and Catflap, the best time to buy a house is when they bottom out and the best time to sell gold is at the blow off top and a mortgage would be required between the two. I have been considering doing this myself.

 

The best time to buy gold would have been around 2000 but the best time to sell a house and buy gold was 2005. A big loan to buy gold in 2000 paid off in 2005 with the sale of a house.

 

The trouble now is trying to predict the bottom of houses and not leave selling the gold too late.

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