patrick.net

2001 the average starting salary for a Northern Arizona MBA grad was $57,500.

They do not even worth 1 Ha?

Gold 656 and still on the rise.

Most gold bulls only set a target 600 by 2006 year end, now breaking 700 doesn't even seem bullish enough.

Thinking about gold as the next irrational bubble...what sorts of signs should suggest a peak?

My wife and I are full force focusing on leaving the Bay Area. What is the point of being here if you can't afford a basic life style. Why stay here without even a fleeting chance of buying a home. Why wait ten years for prices that may or may not fall.

We would both need a 40% to 50% raise just to begin getting in reach of a slum house. What is the point? Why work your ass off as a highly skilled tech worker when you barely make it check to check.

We're focusing all of our energy from this point forward on leaving. Good bye to this messed up place, we'll see you on vacation. As we leave, and many others so will the companies who can no longer find workers.

The peak should be:

1) Mid-night TV infomercial on "how to get richFAST investing in Gold"
2) More gold coin dealers than realtor offices
3) Gold Council spokesperson Ms. Pearville-Old starts talking about how gold will never ever go down...

John Haverty,

A couple threads back, there was a discussion about the psychological value of gold v. real value of gold. I'm firmly in the camp that believes gold will soon be very valuable for psychological reasons (it's long association with value), so I can see a scenario of even $2000/oz gold. However, I think gold has very little real value, because it is way too scarce to replace fiat money and has very few practical industrial uses.

disclaimer: I'm broke, if you take my advice, you're taking advice from a broke person. Think about that! I'm litigation proof!

It is hard to pin a number to gold, but oil is still very much undervalued at this point.

Adjusted for CPI, the oil peak of the 80s should be around $100. However, here are some facts:

1) In 1980, India and China were not part of the oil game. Today, China is the SECOND largest automobile market with 2.5-3M *incremental* automobiles going on the road every year, go figure.

2) There was obviously more oil on earth in 1980 compared to 2006

3) US had a much smaller deficit in 1980 compared to 2006, therefore less urgent need to print money

So, oil above $100 is very doable. Whether it hits $200 or not I am not too optimisitic, but I am betting on it breaking $100. Given an average oil/gold ratio of 15-20, gold should be valued at around 1,500 to 2,000 once oil breaks $100.

China has very little gold, that is a big part of the gold bull story.

Up till the beginning of 2006, the % of gold in China's vast foreign reserve is only 0.6%!! China accounts for less than 10% of WW gold production. On a per capita level, Chinese have very very little gold.

For every percent of Chinese foreign reserve that needs to be converted into gold, it represents another 900-1000 tons of demand.

Now here is the question, you are talking about $90/bbl USD. The Canadians need to pay CAD to their workers for drilling.

Because of the complicated exchange rate issue as USD weakens, the more valid measure is *unit of energy required to extract energy equivalent to today's barrel of crude*.

Owneroccupier,

Depending on the amount of RE implosion and other financial instability, I see a much faster run up on gold, almost completely driven by mass psychology.

Ha Ha Says:

> The country of immense credit and financial flexibility.
> For example, if you are holding 30year mortgage and
> get laid off — no problem refinance to 50year mortgage.
> So insanity will not end — you need to leave this country!

Let’s say the guy with $320K (2.1 Ha Has) in his checking account for the down payment buys the little Palo Alto “starter home” with a $1,280,000 loan (as stated above) the 30 yr P&I payment will be $8,090 a month.

If the guy that is laid off can find someone to refinance his 30 year loan with a 50 year loan (It will be tough to borrow over $1mm w/o a job) the payment will only drop about 10% to $7,216 (not exactly an easy payment without a job)…

down.

Peter P Says:

2001 the average starting salary for a Northern Arizona MBA grad was $57,500.

They do not even worth 1 Ha?
_______

Answer: No! Not a total Ha-Ha value.

However, back then, a decent brick houses was only 1 Ha-Ha.
$57K was pimpola!

Michael H and Peter P,

You've fallen for Ha Ha's incredibly devious scheme of talking about his income. Oh no!

Anyways, what do you guys think about the South African Rand. South Africa still produces most of the world's uranium, right?

astrid Says:
> disclaimer: I’m broke, if you take my advice, you’re taking
> advice from a broke person. Think about that! I’m litigation proof!
Astrid must have missed my post on insurance when I mentioned that attorneys are now getting judgments against “future” earnings when they sue broke people.

An attorney will have no problem getting a big judgment against Astrid since he is sure to get a jury to agree that she will eventually have earnings well above the average female when the jury finds out that on Sunday nights she discusses the inherent value of gold on line while most other females were watching Desperate Housewives…

South Africa is politically unstable, and the economy was really not quite balanced.

Australia will surpass South Africa in gold production by 2007 as the world's biggest gold mine, and has about 30% of the world's known reserve of uranium, compared to around 10% for South Africa. Kazahstan and Canada ranked 2nd and 3rd.

The uranium data is something I read a few years back, so new discovery could change the picture a little bit, although I doubt the ranking will change much.

Michael Holliday Says:

>>> The 2001 the average starting salary for a
>>> Northern Arizona MBA grad was $57,500.

Then Ha Ha wrote:

>> Do not do MBA (unless from TOP 10) ……

Then Michael wrote:

> Using that logic, should anyone get any degree
> other than a top 10?

I tend to agree with Ha Ha overall with a couple exceptions:

1. If you have a job that gives you time off and pays for the degree.

2. You have a job that will give you a guaranteed raise when you get the degree.

3. You work in the public sector and need a Masters to get a raise.

Owneroccupier,

Thanks! And my info source is definitely older than yours. Vintage editions of National Geographics old(back when Zimbabawe was still Rhodesia).

FAB,

Thanks, I'll take that as a compliment. :P The funny thing is that my boyfriend does watch Desperate Housewives on Sundays. He's still a good money manager and much wealthier than me.

He must have been one of those hundreds of junior associates who got laid off by Wilson Sonsini in the dot bomb. Obviously a smart guy grabbing a lucrative opportunity as he sees it.

It is a shame that a law-school-trained professional needs to become a realtor, usually a positoin filled by bored housewives. There is nothing wrong with him doing it if he can earn big bucks, kudos to him. However, there is something very wrong with the society that wastes 3 years of law school training in a job that requires only a few months' study by a rather mediocre brain. It is a clear case of something very sick about this housing bubble.

Anyways, what do you guys think about the South African Rand. South Africa still produces most of the world’s uranium, right?

CAD! Tar sand!

gold just cracked 660. Man, I wonder when I wake up tomorrow, if it is going to break 700??

Near-term eCBOT mini-gold futures at 6635!

It is basically trending up since the opening of this trading session (4pm PDT)

Anyways, what do you guys think about the South African Rand. South Africa still produces most of the world’s uranium, right?

The downside to the Rand is that it gets punished as a carry trade currency for the USD.

Randy,

That's really interesting! I hadn't thought of RSA as a carry trade economy, especially with the United States. I know (from my Economist reading days) that RSA faces a huge HIV problem and their post apartaid efforts have hobbled the economy, but I hadn't given serious thought to their trading status.

One more reason for amateurs like me to avoid the Rand.

At 90/bbl, the Canadian Tar Sands (oil sands / bituminous sands) become very viable economically. Canada becomes the next Saudi Arabia. Between Venezuela and Canada, 66% of ALL THE OIL LEFT IN THE WORLD in those tar sands...

Australia will surpass South Africa in gold production by 2007 as the world’s biggest gold mine, and has about 30% of the world’s known reserve of uranium, compared to around 10% for South Africa. Kazahstan and Canada ranked 2nd and 3rd.

Hmmm... anyone know of any good currency funds for resource-rich former British colonies? Preferably one that doesn't require passing the Series 7 to be able to understand the risks/transactions involved.

not so good now unless there’s another form of much cheaper energy (nuclear?) to use to extract the oil.

@ahj,

Yes, that's the part where Australia's "30% of the world’s known reserve of uranium" comes in :-). Who knows, Oz & Canada may become the 21st century's newest energy superpowers.

RE listings like the one posted above work on my "last good nerve". I swear, it's the ones that are among the last to "cash out" that seem to be the most gutsy. From the looks of it I doubt this is over a 1,000 sq. ft. including the "studio". So that's what, roughly $1,595 per sq. ft? Then consider the 50 mph relentless traffic in your 30 mph zone. Who could possibly raise children here? Who would WANT to live here? This has "all YOU need to do is find another greater fool" written all over it. It has no value as a "home".

Over the weekend my wife and I saw a print ad for DR Horton for a new subdivision they are working in Albany, OR (near Salem). The full page ad rather than tout all the usual pergraniteteel actually starts out by mentioning that they are "Energy Star" & "Earth Advantage" certified homes. They will be priced between 190K to the 260's and have floor plans from 1,372 to 2,732 sq. ft. Well, at those prices there are some floorplans that are under $100 per sq. ft! While not exactly picturesque Albany is a very nice town, with very nice people.

What is interesting to note is that this is cheap (real cheap) by even our standards. This I feel is proof that builders will continue to build no matter the consequences to "peak of market" buyers. These guys aren't going to simply stop and let the market or wages "catch up". They're going to do the only thing that builders know how to do. Namely, continue building. Would they prefer to be selling these floorplans from the 260's to the 360's? Well sure, what fool wouldn't? This also gives a glimpse that reveals their cost basis and yet allows them enough of a profit to keep the lights on. Not to beat it to death but we are seeing tons of homes come on the market that were bought just in 2004/5 and we have to wonder b/c many of these were custom or semi-custom homes! So it was build to suit but it no longer "suits" you a year later? I understand that peoples lives change but why so many and why so soon after a custom build?

Just for a goof is there a way to track the percentage of homes (in certain markets) that were built/bought in the last say 24 months? I would be curious to see just how big that number really is. Sometime back I believe *athena* said perhaps it's time we called them what the really are. Pre-foreclosures b/c clearly these folks had bought on the expectation of ever higher returns and now their exotic loans coupled with flat to down markets mandate that they bail.

athena also said she didn't want to buy someone elses "maxed out credit cards" and I quite agree.

Smelly Red Thing,
Me and my wife are in the same boat. We're not from here, and have lived in many diffrent places over the years, most of them NOT on the coasts, which is about what 90% of the people who live in the BA are from.That said, many places across the country are just as interesting, in some cases more interesting thatn the BA. I'll agree to a certain extent that yes, the food is more diversified here.The weather is pretty nice. You can go off to the jazz festival of your choice on any given weekend. The job situation is pretty good. But as anyone here cannot deny, that comes at a severe price. It is at this delta that people make their choices. Do you live somewhere that has perhaps less ethnic foods, 4 seasons of weather-some of it unpleasant, but at the same time have your own place, decent public schools, a stabilized living situation since you are paying less, and living in an economic situation where the middle class still rules, with their fleets of Ford Tauruses, Toyota Camrys, and Chevy Malibus?-Or do you live somewhere that has great food, good weather, ethnic diversity, yet horibble traffic, pollution, bad public schools,uncomfortable socioeconomic disparity and unaffordable housing?
I've had to weigh these things over and over.If I moved somewhere else, would I be miserable? Would I have little choice in excercising my artistic expression and exploration? Would the food suck? Would the people be less open minded?
Then I listened to my parents- both of whom are school teachers, who've never been what you could call rich, that live in a rural part of Tennesee. They own their own 2 story home, with an apple orchard, with a swimming pool, 14 acres of land,and 2 decent cars. They just got back from a cruise to the mediteranian. They went to Italy the year before.
On any day of the week, they can watch a free 1 hour concert of americana, bluegrass, or alt country at the locally supported radio station downtown in a coffee cafe that serves free trade coffee and teas. They frequently take off to Asheville, NC, where they can sample origianal mountain cuisine, scenic beauty, or take part of a traditional chair caning class in one of the Appalachian arts and crafts centers. In Oct is the international storytelling festival in Jonesborough, TN. In Nov is the fall homecoming at the Museum of Applachia.I can rattle off a million other things they do on any given weekend. They don't live in the BA, but by what they do, you'd think they did- and they aren't rich either. My parents stay busy. More so than me and my wife, who work round the clock saving our pennies for the day that we can get out of here and buy our own place, which brings me to my next point.
Sure, moving can be a pain. You will have all kinds of worry and uncertainty. But uncertainty is what the BA is all about.Uncertainty of whether or not rent is going to skyrocket. Uncertainty of whether the job market could implode, just like it did in 2001. Uncertainty and the insult that home prices are assanine. So a move is really no diffrent. But you can make this uncertainty less severe simply by saving. That's what me and my wife have been doing for years. Take those BA wages and figure they'll go at least 50% further elsewhere and apply them towards the home you'll be able to buy outright somewhere else. The jobs, careers, and other stuff will come soon enough, but just think about the fact that yes- wherever you move will be diffrent than it is here. But don't make a point of trying to replace what you knew here with somewhere else. That is a big mistake. Start over and fall in love with a brand new place, with it's own quirks, people, food, music, and fun.
In the end, it all evens out eventually. Go with your gut feeling.

Benjamin,
Don't you think that it's rather interesting that wage increases , according to the report you posted above, grew, but mostly due to an increase in Medicare perscription payments? Why this should be counted as "income" is a mystery to me. And as far as the increase in construction, bring it on! More construction means lower prices and more inventory to add to the already record high level.

Don’t you think that it’s rather interesting that wage increases , according to the report you posted above, grew, but mostly due to an increase in Medicare perscription payments? Why this should be counted as “income” is a mystery to me.

Because income figures are aggregated from employer reporting. This includes the employer side payroll costs as well as employee withholdings.

Benjamin,
you're right only to an extent. The largest number of homes are being built in the midwest and SE. the prices there are actually well below the national average, thus it should come at no surprise, with an ever-increasing number of people leaving CA , and the entire east coast for these areas that there should be a demand for more housing, even though there is no shortage of land whatsoever. The national data you're posting is 'national', and not reflective of California, which has been slowing 4 months in a row. http://abclocal.go.com/kgo/story?section=business&id=4095429
-Northern california numbers out any day now.
So I'm not sure how much relevance posting national data, about cheap housing being built 2500 miles away has to do with a blog specifically dealing with BA RE and it's issues has. IMHO....

Ok Randy,
but do you think an employee is going to go to Wal-Mart and buy a lawnmower with painkillers?

Keep in mind when you read "income" statistics, the financial press is primarily concerned about whether income is rising as a cost to employers. So, even if you don't get more HaHas in your paycheck, anything that increases what your employer pays for payroll is income inflation.

You're right nomadtoons,

This is why many say that inflation is the cruelest tax of all.

I'd be reluctant to say that rents are going to the moon. They have firmed somewhat after years of languishing, but to the moon? Nah. I expected this as it became more obvious that purchasing property with hemmoraging monthly negative cash flow no longer makes good business sense (not that it ever did). Now that the outrageous appreciation is officially off the table folks with excess inventory to let have gotten more realistic about what they need to generate from a property for it to make sense. In short, they've finally learned math.

We just sighned a new lease with our landlord.No increases, same low price. Show me the rent increases, and I'll be sure not to move there.

I believe it was Peter P that said a few threads back that "rents" in his area while firming would just about cover the taxes and HOA's due on a monthly basis. The "owner" would still be on the hook for the brunt of the mortgage interest. So we're a long way from a balance on the rent/own calculator.