Isn't it...
Makes you wonder who is actually investing in gold...
As a long term investment it's almost as good as UK property if you buy during one of the periodic slumps in price
It is all, in the words of Abelard, a casino.
Gold is just better odds than most.
If I was rich I'd be busy selling the stuff now and buying UK property and shares in the four big banks.
But gold, because of industrial usage, will keep up with inflation no matter what
LOL - you wouldn't be rich for long then...
They can't let the major clearing banks fall. If they did it really is all over for the UK
Property will, eventually, go up again.
Especially if there's high inflation...
'William Black' wrote this:
Presumably people who wish to make a profit.
It doesn't follow the same boom/bust path as property.
And you spend your time posting on Usenet!
Who said they'd fall? But they won't be paying anything much in dividends for a very long time as they need to use all their profits to repay the taxpayer and to rebuild their reserves. That's why their share prices are so low and will stay low in all likelyhood.
Yeah, maybe in 2030.
Property prices have historically followed a trend of 3 times average earnings. Whenever they've exceeded 3x earnings, they fallen back to that level again eventually. Even with the recent drops, current prices are close to 6 times average earnings!
Average earnings are likely to drop over the next couple of years while the economy is in recession. So even for prices to stay stable, the P/E ratio would have to rise above the current ratio, which is already double the historic trend! You really reckon that'll happen in a recession?
Even if the economy makes a good recovery and average earnings start increasing at the same rate as they were recently, it'll take till around
2030 for average earnings to rise to about 50k, which will mean the *current* average house price is inline with the historic trend...And don't believe the bullshit about demand inevitably rising. Over the last
10 years the population has increased 2.9% while the housing stock has increased about 9%.Still, it'll make for some entertaining TV, like that programme about the idiots who bought rip-off buy-to-let flats a couple of years ago, and now can't find anyone to rent to at the price they need to pay their bills and have seen the prices fall by 50%....
The sight of the buy-to-let numpties coming horribly unstuck has been one of the happier moments of the past half year hasn't it.
Watching the ghastly Daily Mail reading classes come horribly unglued is, I find, deeply entertaining.
I got invited to join a buy-to-let cartel, but turned it down on the grounds that anything that looked too good to be true probably was...
gold is still well below its 1980 peak in real terms
that is called a wager...
like gold, the fortune of banks is heavily tied into government behaviour...housing somewhat less so....
industrial use is around 450 tonnes a year... to the hoarders...another 450 tonnes jewelry is ~2,400 tonnes
overall about 160,000 tonnes has been mined since cave dwellers
in 2007 demand was 160% of production (due to latest gold bug fever)...
figures from nat geo jan 2009
"By one measure it has been estimated that, if the banks fully abandoned gold, gold might return to its price at the beginning of the
19th century - estimated at $68 per oz at today?s prices..." (Economist, 30 May 2002).related page
What an odd statement.
In the less civilised parts of the globe, and these are getting bigger every day, gold is the only currency that counts.
The British government makes a substantial profit on selling gold sovereigns to people.
Or those who've bought a holiday home in a country where they don't understand the local laws, language or customs. Then get told the local council are building a motorway through their back garden and *they* have to pay for it!!
It's not confined to Mail readers (in fact the only Mail reader I know who was into BTL sold up in 2005 and made a fortune). It's probably more prevalent amongst Gruniad reader types who actually believed our moron of a PM when he continually claimed to have abolished boom and bust! I know one who lives in a 4 bedroom house, just him and his wife (no kids and no intention of ever having them) who very nearly got into BTL'ing as well. In fact owning a bigger property than you need as an "investment" is generally more stupid than BTL, you're owning excess property with no rental income from it...
Or you weren't rich enough? You said you'd invest in property if you were rich.
I'm not rich.
I was offered the chance when I got a large pay off when made redundant from a job.
The choice was between going in for a B-T-L or going into business.
I went into business, then sold up a bit later and retired...
How long ago? BTL was certainly a good investment 10 years ago.
'Andy Pandy' wrote this:
BTL was a good investment long before it was called BTL :-)
Probably a good call then. Good job you weren't rich...
and they are still offerring 4.5 times salary multiples.
That depends were you live. According the the land registry the average house price is still £156,753 (January 2009).
You'd be hard pressed to buy a house for £96,000 anywhere I know.
Indeed.
Only in this cycle (and the very end of the last one in the Artisans Mortgages crisis). Prior UK credit bubbles featured railways stocks, canal stocks, and of course South Seas Shares as a proxy for government debt.
Undoubtedly the propaganda (against renting) in the mid 20th century played a part in property becoming this cycle's primary asset, as did the performance of property in the mid-cycle inflation of the late 60's and 1970's.
FoFP
rfd for uk.finance.schadenfreude ?
FoFP
Amen. A good start would be to sack every Treasury, bank of England official, journalist and anyone above the basic managerial grade at the banks who aren't on record as having predicted this. They're the guys who landed us in the shit and they're just as likely to be totally clueless as regards getting us out of it.
Then recruit to replace them only amongst those who did predict the bust (or even identify that it was a credit bubble rather than a housing bubble). After all, they could hardly perform worse than those they'd replace.
Just to show willing: I'll take RBS, on half the salary and pension of their ex-chairman.
FoFP
Oh no we don't. Shared ownership is the worst deal in town and IMHO should be banned by HMG not promoted by them.
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