Gold and Silver or Property?

Discussion in 'Markets & Economies' started by browski, Sep 13, 2012.

  1. renovator

    renovator Well-Known Member

    Joined:
    Jan 20, 2011
    Messages:
    7,410
    Likes Received:
    125
    Trophy Points:
    63
    Location:
    QLD
    Still in the red but STILL making income :p:

    Nope not in love with building just money that i can actually spend each week

    You havent actually proved to me that gold can make an income & is the better investment .

    So i'l stick with actually making cash to spend & you can HOPE gold doesnt tank lol each to their own i guess
     
  2. bordsilver

    bordsilver Well-Known Member Silver Stacker

    Joined:
    May 23, 2012
    Messages:
    9,617
    Likes Received:
    315
    Trophy Points:
    83
    Location:
    The rocks
    valuecreator already answered this multiple times. Gold has nothing to do with making income and unless you are a speculator is absolutely not an active investment. You know this, VC knows this, most of the forum knows this. Please stop repeating it as some sort of justification to yourself.
     
  3. fishball

    fishball New Member Silver Stacker

    Joined:
    Apr 11, 2011
    Messages:
    6,627
    Likes Received:
    0
    Trophy Points:
    0
    Location:
    Shin Sekai Yori
    I was just gonna say the same thing. Gold doesn't generate income and if you believe it does you're doing it wrong.
     
  4. valuecreator

    valuecreator Well-Known Member Silver Stacker

    Joined:
    Dec 2, 2012
    Messages:
    1,560
    Likes Received:
    65
    Trophy Points:
    48
    Location:
    Qld
    Gold is not an investment. It's a store of value. That makes it the best valuation tool.

    Maybe RE is sending cash your way, but your net worth is going down. But then again you don't care!

    Those who don't understand interest, pay it.
    Those who understand it, earn it.
     
  5. renovator

    renovator Well-Known Member

    Joined:
    Jan 20, 2011
    Messages:
    7,410
    Likes Received:
    125
    Trophy Points:
    63
    Location:
    QLD
    So you obviously think its wise to have a lot of money "invested" in something that doesnt make you money & can potentially lose money overnight

    Most wealthy people i know have their money working for them not just sitting .

    Show me where you have earned your interest .....just because your wealth didnt deflate doesnt mean you actually earned something . You earned nothing but a good feeling . You cant spend feelings .

    I would rather have a net worth that is lower than yours but not have to work to get money to eat & have fun .

    Is net worth all about bragging rights ? because that is all you will have ..& still have to go to work to buy food pay rent & have fun

    So gold is a good valuation tool . Its as good a tool as a non working power drill whats the point if you still have to drill a hole by hand .
     
  6. renovator

    renovator Well-Known Member

    Joined:
    Jan 20, 2011
    Messages:
    7,410
    Likes Received:
    125
    Trophy Points:
    63
    Location:
    QLD
    What was the OPs thread title & question?

    If VC can keep banging on about how good gold is i will keep repeating how its not & point out why & the answer is INCOME . I repeated it because he wouldnt answer how he was better off & all he could give was net worth .. What good is net worth if your gradually spending it away to pay for your daily needs &/or still having to go to work everyday .
     
  7. valuecreator

    valuecreator Well-Known Member Silver Stacker

    Joined:
    Dec 2, 2012
    Messages:
    1,560
    Likes Received:
    65
    Trophy Points:
    48
    Location:
    Qld
    maybe we should start a new thread called "what's the best way to make money"

    that would be interesting.

    we are in a negative interest rate environment right now. can't last long, but it is what it is.

    they're screwing up compound interest. It's called Financial Repression and it's the official policy of the IMF and the BIS (http://www.imf.org/external/np/seminars/eng/2011/res2/pdf/crbs.pdf)

    It's only gonna get worse. Capital control next. and taxing the net worth.

    So the move is to not lose money. everything else is gambling. I don't gamble.

    The hardest thing in investing is sitting on your hands.

    If you want to make real money, start a business that add value (solve problems) for a lot of people.

    Things are set-up so there's very few moves left.

    I suggest you read: http://ww1.dowtheoryletters.com/dtlol.nsf/htmlmedia/body_rich_man__poor_man.html

    specially the part about the difference between the rich man and the poor man.

    Inflation is a tax, and they're taxing you big time.

    The wealthy know that gold is not in a bubble, it just finished catching up for being a dog for 20 years. It always catch back.

    RE will start catching up too, it always does. do you have 15 years to spare?

    The wealthy accumulate assets and they're EXPERTS at knowing when its cheap or expensive. Have never met a rich guy that wants to hold lots of cash, because he knows its the worst asset ever.

    the reason I spend a bit of time on this thread is because I'm acutely aware of the WEALTH TRANSFER going on. A lot of good people working and saving 30+ years of their life, RE and Super is their retirement. They never gonna know what hit them.

    And their kids are so FUBAR, I don't want to go there.

    So if I got just ONE person to think about their money differently, that's great.

    I think I about laid it all out.


    "I just sold my house and I'm a nominal billionaire.
    Now me go buy meself 3 gold coins! woot woot!!!"

    [​IMG]
     
  8. long88

    long88 Member

    Joined:
    Jun 19, 2012
    Messages:
    779
    Likes Received:
    12
    Trophy Points:
    18
    Location:
    Melbourne
    value creator:

    "past performance is not an indicator of future performance"

    at least with RE, you know you are ahead by x%.... and controlled by you.. not some CEO.
     
  9. GiLa

    GiLa New Member

    Joined:
    Dec 6, 2012
    Messages:
    55
    Likes Received:
    0
    Trophy Points:
    0
    Location:
    Australia
    I love the points that have been brought up and would like to add my 2 cents of fiat currency into the mix

    I believe in today's economies that ALL assets can potentially go to zero (depending on government intervention). But what is classed an asset, this would be the definition that can be vague in alot of people's mind.

    In my opinion an asset is a store of value and an investment produces income. When it comes to Real Estate for example it has the potential to be classed as both. What I believe has happened to the real estate market, there has been over speculation what real estate can do for you.

    That is not to say that good deals can not be found, as recently (Last Friday) I have been given a real estate offer that was well below the market price of the property and the current rental income based on the price given to me would equate to a nice 10% income. However because it was a fire sale, and didnt have the cash/credit ability, the developer sold it to someone else.

    Going back to my saying of "If you do things normally, you can only achieve normal things." I have pursued my interests in my business since leaving year 10, helping other people with their technological requirements. Because of the various people I have met and their views of money, for me, my business is still my greatest investment. Will I become a x-illionaire, I hope so, if not, I have been enjoying my roller coaster ride.

    My biggest problem has been that I spend money like a fish needing water. I only decided to start researching on ways that will help create wealth protection for me since the start of July this year (should of bought silver back then). For me silver was the right choice as I still get the satisfaction of spending my money but retaining some sort of value. Would I care if silver goes back down to $5/oz, not really, because to me, I would of spent it on some other bull crap anyways.

    So why not get a mortgage? well because to me a loan feels like a bill/commitment which may restrict the decisions I make in my business. Financial Freedom can be easily obtained if my liabilities are low.

    So at the moment yes I understand my net worth may be very low, but I am definately enjoying what I do. Of course I have plans in place to have my own property to live in outright as again I do not like having bills and hence precious metals allows me to achieve that through the storage of value.
     
  10. browski

    browski Member

    Joined:
    Jun 23, 2012
    Messages:
    141
    Likes Received:
    0
    Trophy Points:
    16
    Location:
    Melbourne
    As the OP, I think the essence of my question has been lost.

    Here is my very specific question.

    In the event of hyperinflation (or very high inflation) what will be the effect on property carrying debt versus property and gold owned outright.
    I'm really after people's thoughts on how a currency crisis in the US/EU will profoundly effect Australian interest rates. Is it perhaps time to either sell property (which is not owned outright) and/or move from variable to fixed interest rates?

    Any predictions for Aussie interest rates in Dec 2013?
     
  11. mmm....shiney!

    mmm....shiney! Well-Known Member Silver Stacker

    Joined:
    Nov 15, 2010
    Messages:
    20,669
    Likes Received:
    3,649
    Trophy Points:
    113
    Location:
    昆士蘭
    Interest rates don't seem to be moving far for a while, we are holding off fixing our mortgage rate. A quick look here and the rates for 5 years fixed are higher than 1 year, what does that tell you?

    http://www.ubank.com.au/ubank/web/c...&_afrWindowMode=0&_adf.ctrl-state=5v7pne4uw_9

    And government bond yields suggest not much is going not too far in not much time soon:

    [imgz=http://forums.silverstackers.com/uploads/753_screen_shot_2012-12-17_at_42956_pm.png][​IMG][/imgz]

    http://www.bloomberg.com/markets/rates-bonds/government-bonds/australia/
     
  12. bordsilver

    bordsilver Well-Known Member Silver Stacker

    Joined:
    May 23, 2012
    Messages:
    9,617
    Likes Received:
    315
    Trophy Points:
    83
    Location:
    The rocks
    Predictions of what a small group of people will do are fraught, particularly since another small group holds the power to change the decision makers who themselves are subject to random change based on who farted last week.

    My "prediction" is that stagflation will become a common MSM phrase by 2015. The only way out (besides hyperinflation collapse) is for interest rates to rise and to rise significantly but trying to predict when is impossible as it's not a market-driven thing. Politically, the stagflation will be driven for as long as they can pretend low interest rates are "helping" as seen by the can kicking in the 5 years to date (and the 20 years prior to that). Hence it will possibly be a year or three away before they rise but that is dependent on what the US/Euro bond holders do.

    A key thing to remember, particularly with an anticipated increase in bank failures, is that ownership of assets with high enough levels of debt (or unreliable income) will change hands. As far as "the economy" is concerned the real assets will still exist (but potentially in a depreciated state due to a reduction in non-essentially CAPEX) but who will own them is anyone's guess.

    If you hold a leveraged asset like property, try and be as sure as you possibly can be that you can service a 15% interest rate for a couple of years with a lower income. Also be as sure as possible that the debt is low enough to enable rapid refinancing at 30-40% lower nominal prices. If not pay down (or sell) as rapidly as possible until it is manageable (and/or hedge partially with gold/silver).

    When the debts eventually get written off through default, you don't want to be the one holding the can you want to be the one able to buy the pieces.
     
  13. GiLa

    GiLa New Member

    Joined:
    Dec 6, 2012
    Messages:
    55
    Likes Received:
    0
    Trophy Points:
    0
    Location:
    Australia
    OK that question I have been researching myself as I've been wondering wether or not to purchase a property now, knowing what I know about the markets.

    Based upon the past around the late 1980's, my parents bought a house in the eastern suburbs of Sydney for $120k then within a month jumped to $180k and about a couple of months later interest rates were like 12%. Upon recently asking my mum what happened back then as I was still too young to remember and her lack of knowledge of the financial system didnt answer any questions.

    I have a client whos a market technical analyst and he told me that what happened was there was a stock crash about that time and the markets invested into property and it happened twice in the early and late 80's.

    The high interest rates caused a recession in Australia for early 90's. I only started taking interest in forex since 1992 for a year 7 project and I remember the AUD was buying USD$0.48. This allowed our exports to be cheap and our imports to be expensive which had helped our economy grow. Now US is trying to debased their currency and so is Japan which could mean that low export of Australian goods and our economy contracts

    I would like to think we're now in unchartered territories hence so much speculation on what the outcome is.

    If your committed to a home loan now, the question is at what interest rate can you handle up to, and how long can you survive the repayments without a job?

    Owning anything outright would be king in my opinion.
     
  14. GiLa

    GiLa New Member

    Joined:
    Dec 6, 2012
    Messages:
    55
    Likes Received:
    0
    Trophy Points:
    0
    Location:
    Australia
    Similar thoughts
     
  15. bordsilver

    bordsilver Well-Known Member Silver Stacker

    Joined:
    May 23, 2012
    Messages:
    9,617
    Likes Received:
    315
    Trophy Points:
    83
    Location:
    The rocks
    That sums it up.

    W.r.t. residential property it's worth remembering that they aren't marked to market except when you refinance (potentially by force if a bank goes under).

    As shiney posted 5yr fixed rates are now down to sub-6% which takes someone through to Jan-2018. As far away as that sounds it seems likely the world economy will still be in a depressed state due to the confluence of retiring boomers shedding any remaining assets and beginning to hit the peak health care cost years across the Western world plus China hitting ageing effects plus potentially the Chris Martenson-style EROI arguments (some of which are overblown).
     
  16. long88

    long88 Member

    Joined:
    Jun 19, 2012
    Messages:
    779
    Likes Received:
    12
    Trophy Points:
    18
    Location:
    Melbourne
    the only big issues here for us (property holder mortage + investment property), is when the bank recalled the loan, for whatever reason.. then we will be folded.. and left with holding nothing... but if i were to be called on loan, then million other out there will be the same.. and i wonder what kind of situation we will be in to enable us to have something like that to happen. there must be a catalyst for the bankster to enforce their power so that we have to accept it without any choice.



     
  17. bordsilver

    bordsilver Well-Known Member Silver Stacker

    Joined:
    May 23, 2012
    Messages:
    9,617
    Likes Received:
    315
    Trophy Points:
    83
    Location:
    The rocks
    Yeah, forced repossession of residential property will be the last asset the Australian banksters will attack - partly because of the rules and politics but mostly because it they are so heavily dependent on it. Unlike the US we primarily have recourse loans which adds to it's likelihood of being the last asset to tank massively. The biggest potential catalyst will be bankruptcy (assuming the Aussie Govt allows it to happen) akin to what the commercial guys experienced in the CBA/Bankwest criminal activities.

    Rolling forced sales of subsets of the population is possible (and likely) rather than system-wide RE foreclosure (I think - maybe, perhaps).
     
  18. renovator

    renovator Well-Known Member

    Joined:
    Jan 20, 2011
    Messages:
    7,410
    Likes Received:
    125
    Trophy Points:
    63
    Location:
    QLD
    I doubt they will call in home loans . Why would they want an asset that they couldnt resell they would prefer to suck you dry & keep making interest for the timeframe of the loan . Calling one in would be the absolute last resort imo
     
  19. bordsilver

    bordsilver Well-Known Member Silver Stacker

    Joined:
    May 23, 2012
    Messages:
    9,617
    Likes Received:
    315
    Trophy Points:
    83
    Location:
    The rocks
    +1. The bankers aren't dumb enough to take control such a crappy performing "asset" as residential property - they want the cash flow. Sell the Ponzi dream don't buy into it.
     
  20. hawkeye

    hawkeye New Member Silver Stacker

    Joined:
    Nov 10, 2010
    Messages:
    3,147
    Likes Received:
    2
    Trophy Points:
    0
    Location:
    Perth, Australia
    Not this old myth.

    http://www.macrobusiness.com.au/2011/11/recourse-mortgages-dont-prevent-housing-busts/

    EDIT: with this stuff, just look at what has been happening in other countries if you want to get a feel for what a potential property bust in Australia would be like and how the authorities and banks would deal with it. There is an advantage to being last in the world.
     

Share This Page