On August 4, 2011, gold closed at about $1650 per ounce. That's about 22% in six months. This likely reflects the level of confidence so many folks have in our House of Representatives. Unfortunately for us little investors, the really big investors and Governments don't have to pay that 15% charge every time they buy or sell something (nor the tax on transactions), so they're in a position to push the price up and down to their advantage.
The financial pundits are always making fun of the "cash under the mattress" people. Burying stuff in your back yard ala Erskin Caldwell may seem dumb; right up until you pick up the paper and see that your NYSE stocks have lost thirty percent of their "value" in a week, and then they lose another 20 % over the next month or so... Don't we wish we had had our money in gold in September 2008? (When it was about $700.)
We need to remember that those same pundits called "no money down, no principal paid the first year loans" for super over priced houses SECURITIES! (House prices propped up by Greenspan's super low interest rates). "Hey! I can afford to pay for more house than I can use for more money than I have because the Government has interest rates WAY below the inflation rate! And I get to deduct the payments from my taxes! And the house will double in value in three years.*" And the real estate people obliged by hawking the "no risk" investment potential of houses and there were TWO TV shows about "flipping houses" for big bucks.) Now let's bundle the loans and sell them to other banks! Oh Boy!
SECURITIES! Secured by what? A promise to pay made by someone who is spending 130% (average American family debt) of their income on restaurant meals, cars, and vacations? (Also "secured" by a home "equity" loan. Equity that only exists and only on paper because the real estate sales people SAID the house would sell for big bucks because *see above*). SO, does anyone ever ask just exactly where the big bucks sales commissions for Realtors come from? Or where the two billion dollars came from that the Sandler couple walked off with just prior to the implosion of their World Savings Bank? Their bank was so Ponzied with fake "securities" that it brought down Wachovia, the purchaser.
The worst thing in the world that can happen to you is for a realtor to tell you that your house is worth twice what you thought it was IF YOU AREN'T PLANNING ON MOVING! And maybe even if you are, because you have to live somewhere and you'll have to buy another house that's probably over priced by the realtors. "Everything is worth what someone will pay for it." said Publilius Syrus about 2100 years ago. But that is only true if there is money out there. How much money disappeared in the fall of 2008? Everything is worthless in dollar terms right up untill it's sold. A house is two things; an investment and a place to live, don't confuse the two.
We give lip service to the fact that everything comes from somewhere and you don't get something for nothing, but if you're just buying and selling things, houses, and companies, you're not creating anything, you're just moving money around so fast you get to keep some of it (Ayn Rand). Now, just where did all those "profits" come from? It's too complicated, say the pundits, you wouldn't understand.
Back in the 17th century there was a bubble for tulip bulbs in Holland. You could buy two or three houses with the right kind of tulip bulb because the bulb was GOING TO BE WORTH SO MUCH MORE TOMORROW! Forever and ever.
I'm still reading that the housing industry isn't back to "normal". Normal like what was going on in Las Vegas in 2006? I wouldn't live there if you gave me a mansion.