patrick.net

Idaho has split the primary dates. Democrat primary on 5 February: GOP primary on 27 May. I wonder if I can re-register and vote in both of them?

I just checked....Idaho doesn't register voters by party affiliation! So I'm already good-to-go voting in both. Is Joe Biden still in the race?

Gold price is now above $850.

Perhaps getting a loan is not financial suicide after all.

I think saving in fiat currencies is financial suicide.

What is the best way to invest in platinum?

Not investment advice

Gold price getting above $850 has nothing to do with housing price. If history were to repeat itself, housing price will stay flat for many years, just like the 70s.

However, on the other hand, we will be seeing $6 gas, $7 one-gallon milk (non-organic) and $10 bread very soon.

The current oil price has not been reflected in the retail gas price yet, when that happens, credit card loans will have to grow again - people are already funding their gasoline expenses with credit card.

Peter P

You can buy physical platinum at Perth Mint. You can search my previous posts on how to hold physical PM using Perth Mint.

My 2008 predictions

1. Yes, horrible year for house debtors.
2. Very painful recesson and overall slowdown.
3. With that, explosion in unemployment.
4. Good things come from this because oil prices and inflation pressures will fall.
5. This relieves pressure on the dollar and precious metals will also fall as money gains more spending power. It takes the same amount of gold to buy a house, if it takes less dollars to buy a house, less dollars buy the same amount of gold.

Peter P, If it hits $900 I'm selling the rest of mine. I have about 5 ounces left. I've been slowly selling it off.

Gold is the new bubble but like housing I'm happy to sell to someone with a different point of view.

Malcolm,

your scenario sounds too fast forward, this will be a much more prolonged process than you think because all the current stakeholders will do whatever they can to prevent the inevitable from happening.

Give it at least another 5 years for your scenario to happen. Oil addiction takes a long time to break, especially in a country with almost no public transport infrastructure. Anywhere on the west coast, if you want to hold down a job, you need to drive, and driving consumes 60% of US-imported oil. From 2003 to now, the per capita oil consumption in the US, after the oil price tripled, has shown no decline.

Malcolm,

it's exactly your attitude towards gold that says that the run is far from over. When I see the whole world reaching a consensus that it will definitely break $xxx, and Cramer jumping up and down saying everyone MUST buy gold on Mad Money, then I will cash out.

Gold Futures Top $860 an Ounce on Weak Dollar, Record-Setting Crude Oil Futures Prices

NEW YORK (AP) -- Gold prices topped $860 an ounce Wednesday as a weak U.S. dollar coupled with a record-setting push to $100 oil spurred demand for the precious metal.
Other commodities also climbed, further boosted by an influx of money into the market at the start of the new year.

An ounce of gold for February delivery jumped $23.50 to $861.50 an ounce on the New York Mercantile Exchange after hitting $864.90 earlier in the session. The spike surpassed gold's recent high of $850, but still fell short of its all-time high of $875 an ounce set in 1980.

The surge in oil prices helped boost the price of gold as investors shifted resources to the precious metal, often seen as a safe haven against inflation and political uncertainty.

"I think there's a chance it could hit $890 in the next two weeks," said Tom Pawlicki, a precious metal analyst and energy analyst at Man Financial Inc. "Oil's definitely playing a part."

Before Wednesday's jump, gold ended the year up almost 32 percent.

More teens are borrowing money to go to college -- and they're borrowing more than ever. Students graduating with some of the lowest average debt in 2006 attended some of the priciest private colleges, while those with some of the highest average debt graduated from historically black colleges and universities. That seems backward, but Princeton University graduates leave school with the lowest average debt -- $4,965, according to a new report by the Project on Student Debt (at projectonstudentdebt.org/files/pub/State_by_State_report_FINAL.pdf).

Princeton is a very caring school, just like Caltech. I know good friends both both schools who are just from middle class families but were able to have their tuition covered mostly by grants (need-based), and both of them graduated with almost no debt.

OO, it reaches a point where yes that $1,000 magic limit translates to a meager ROI. A $50 move at $800 or $900 per ounce isn't as exciting as a $50 move at $400 or $500. It could reach $1,000 but then the downside risk starts overtaking the upside potential. If everyone believes $1,000 is the top would it ever reach $1,000?

OK, my really annoying ad....
Robert Wagner touting the reverse mortgage "I know it sounds to good to be true"
Whaaa? How is a bank making a killing off a very safe investment by giving a conservative amount of money which tranlsates to very costly money too good to be true?

Gold is the new bubble...

Really? I wonder.
It seems more a shift of resources in order to preserve wealth, than a disconnect from market fundamentals, right now.

What would indicate a gold bubble?

It will go far above $1000.

Adjusted for inflation, the historical high of $850 should be at least $1,700 2008 dollar. See, nominal value is a moving target, it depends on what the real inflation (discounter) is.

Commodity boom lasts a median period of 16 years throughout history. It's because commodity boom (and the inflation induced by commodity boom) reflects the ultimate supply demand imbalance that takes time to adjust. And market always overshoots. I will sit back and relax for a few years before thinking about what's next to invest.

What is the downside risk? You see Bernanke raising interest rate to 18.5% like Volcker? We are not even done with interest rate cutting yet. Wake me up when Fed rate reaches 1% and somehow we need to start raising interest, if we reach that point.

OO, as far as the pace, just read your other post. Yes my opinion is the downturn has reached the breaking point. I used to think people here had unrealistic expectations on how quickly housing would drop. They would get frustrated, why are sellers holding out....etc. I've said to many, well, most people can hold out for at least a 6 months to a year so there is a built in delay to the inevitable. The price drops when it is sold at the lower price though the market is ahead. I believe now though the economy will crash in the next 2 quarters and the slowdown in demand will be reflected in a lowering of oil prices. Of course there are variables like the emerging markets continuing the demand but the US slowing down has to impact China's factories. I have said for a couple of years that most people here are on the same page but the variable is the timing. It is really hard to precisely predict whether a trend line will be steep and short or shallow and longer.

Guys, I just got a call from Sandipe from Pacific Mortgage. I told him I would relay his message that Pacific Mortgage no longer sends those types of flyers out and hasn't since 2006. I emailed them after seeing that Dennis was correct, and that it is clearly a deceptive ad since they did use the words .5% rate in the body only to clarify the APR in the fine print. It is false because it doesn't say the payment is calculated on .5% and when you use the word rate referring to a loan it means the rate interest is calculated. My email contained a warning that I may forward it to DRE for investigation as a consumer complaint. I suspect they have already been scolded for sending those out.

Sell gold when your morons neighbors all brag about the gold that they recently bought and how it will only go up in value.

Hold on to it till then.

So far, I haven't seen any indication from bendover ben that he would actually take steps to strengthen the dollar. Dollar will drop more and gold will rise more.

Kee-rist, people. Are we back to the old "Bay Aryans are all Googleaires and make 5X the incomes of everywhere else, thus prices cannot fall in my section of the Fortress" canard? How many times is it necessary to debunk this annoying myth:

http://quickfacts.census.gov/qfd/states/06/06075.html

Just plug in your county or city and go. Ex:
Median household income, 2004 San Francisco: $51,815 CA: $49,894

HARM, the median household income in my city (in the peninsula) is > $95K!

There is definitely a speculative element to the price of Gold and Oil. There always is. Supply/Demand, inflation expectations and change of confidence in fiat currencies also play a part.

I agree with many posts here - the speculative element in Gold is nowhere near to what I am used to seeing in stocks and houses. When it comes to reducing positions in Gold, I would not be using some magic number. I will see how euphoric the sentiment is and then decide.

Sell when panic buying is the norm.

* NOT INVESTMENT ADVICE

My wife and I, despite being educated professionals in the top income quintile nationally (not sure about the Bay Area though) make considerably less than 1 HaHa combined. Despite being such *obviously destitute paupers*, we manage to save a bit each year and max out our 401k/IRA contributions as well (probably by selling our blood, shopping at the local Salvation Army, and foraging for food in the local dumpsters).

Fyi: I am moving up there in 2 weeks. Can all you locals tell me, approximately how long will it take for the BA Kool-Aide to fully kick in and for me to lose all sense of perspective?

Steveoh Says:
January 2nd, 2008 at 11:42 am
"Gold is the new bubble…
Really? I wonder.
It seems more a shift of resources in order to preserve wealth, than a disconnect from market fundamentals, right now.
What would indicate a gold bubble?"

Because in a couple of years it doubled when prices in general have not increased significantly. The largest household expense has been in housing which roughly did track to gold. Gold still going up while other things including housing are falling indicates a disconnect to those fundamentals in my opinion. If both continue in the same directions gold will seem overpriced. Gold is not oil, gold is a reflection of what money is worth at a point in time, or what the market thinks money will be worth at that point in time in an irrational market. That is why it is seen as a hedge against inflation, it is a bad investment during deflation. If you have an inflationary outlook then your fundamentals are sound in supporting a gold increasing, I have a different point of view. If you are right, there will be much bigger problems than just what someone's few ounces of gold are worth.

To diversify a little I bought 2 full pads of forever stamps. That is a real hedge since it always buys the same service forever. Technically I won't make a penny but that $1400 will always buy the same thing as it does today.

HARM, the median household income in my city (in the peninsula) is > $95K!

So? I'm sure the median HH income for Bel-Aire is probably ~$300k (too bad its not listed). The median income for Alameda is $57k. We can all cherry-pick, but it doesn't change the fact that there are not enough super-rich people who haven't yet bought to sustain housing prices in NCal --not even in the Fotress.

There is a reason why this belief of mythological proportions in Bay Aryans earning power keeps propping up.

Permarenter pointed out that his (her?) family is a 2-income family that is still renting. SP/OO point out how high the salaries are.

This is because the bubble-bloggers are NOT the norm. We simply are not the most representative sample. Not just from an elitist point of view. Most people here are money savvy. Very skeptical of conventional wisdom and willing to swim against the flow.

So often times we mistake ourselves for the world.

StuckInBA Says:
January 2nd, 2008 at 12:01 pm
"Sell when panic buying is the norm."

Someone like me who bought a bunch of it 3 or so years ago and thought $500 per ounce might view todays buying as a panic. Do consider the annualized return. Like I said a little earlier, the appreciation has to increase to keep the same annualized ROI, it gets to a point when the money would do better in a bank. That's been my exit strategy for gold, and when I owned other properties. When ROE equals the safe rate, time to sell.

I always thought of pot as the most popular drug-of-choice in the BA, but now I suspect it might be crack.

Correction to ROI, on the original invested amount the annualized return is the same for the same level of appreciation. It is the investment plus appreciation equaling ROE which is how I determine exit point.

"and hasn't since 2006"

Well thank heavens for that! Otherwise we could have considered them a contributing factor to the bubble...

I've picked up some more gold recently and am probably in OO's camp (wake me when they decide defending the dollar is a priority?)

While it IS... a wonderful think to have a local blog started up in your area one of the things I've found is that since ALL the posters there are "new" when you say something like "I've been saying that since 2004!" it really doesn't cut any ice w/ them. In fact if anything they tend to just blow it off like you're some BS artist that didn't "discover" the bubble a moment sooner than they did. So... great local intel, but no real sense of history.

Malcom,

That is why it is seen as a hedge against inflation, it is a bad investment during deflation.

Mish has been arguing against this all along. If you haven't read his blog, please do. He is not god and he can be wrong. I disagree with him on many aspects in my uneducated non-economist way of thinking. You can disagree with his premises, but his arguments are logical, consistent and honest.

According to him, gold is actually a very good investment in deflation. Not good in normal-inflation - proof is last 20 years of performance. And very good in hyper-inflation, which I am willing to bet will not happen.

DinOR :

wake me when they decide defending the dollar is a priority?

Are you implying that you don't trust our Treasury Sec ? ;-)

StuckInBA,

Not at all! I don't want to get to embroiled in the ROI/Exit-Point debate, it's just when you're in my end of the industry, clients see noteworthy events, call in, and want to be assured they ALREADY own it!

(So owning gold in this instance is defensive in more ways than one)

I actually believe the stat that the median household income in the BA is about $50k. That's 2X $25k, or about what I made as a bench tech FIFTEEN YEARS AGO.

So, I marry another bench tech, preferably a non-White one since they get paid 2 or 3 dollars more an hour (for a bit less work I might add) and if not already in the BA we move to the BA.

Hey Presto, we're rich Bay Aryans! We can buy a million-dollar house!

OK ok let me get back to reality .... the truth is, a person can make $8-$10 an hour in the BA or they can make $8-$10 an hour in Bumfuck Tennessee, but the living costs are less than half the BA costs in Bumfuck, and the people are nicer.

The only reason I can see to live in the BA is if you're single or a really well-matched couple and you can live in a hippie van thus avoiding the insane cost of rent, and live in the BA to enjoy what the BA is about, which is not working yourself to death. You can work yourself to death anywhere in the US, but only the BA and a few other places have nicer weather, nice beaches, some good clusters of musicians and artists, things like that. If I were good at an instrument or at twisting balloons (Nope Twister don't worry, I don't want your job!) or something like that, the BA is one of the places to be discovered. You can actually made a decent living doing that with all the beach areas, hangouts, farmers' markets, swap meets, etc. I'm willing to believe $100k a year is possible if you do something popular and you hustle.

But most people in the BA are working their asses off just to survive and don't get to do much but stare at the walls of their cubicle, or work 2 shifts at Costco or something.

So, the BA is really only a good place to be "discovered" not for bread-and-butter living.

Peter P, If it hits $900 I’m selling the rest of mine. I have about 5 ounces left. I’ve been slowly selling it off.

On the other hand, I see $2000/oz a real possibility. Gold is not YET a bubble. However, gold price is going to be super volatile.

Disclaimer: I have a tiny physical gold and GLD holding.

NOT INVESTMENT ADVICE

Don't some of you hold out even the remote possibilty that all of these future uncertainties are already built in to the gold price?

DinOR, is defending the dollar a priority? (rhetorical restatement) Who stands to lose? Would policy makers favor the poorer masses or would the wealthy special interests win them over? So far IMO they seem to favor the poorer masses probably because it is an election year. That begs the question of whether policy will change after the elections. Do we wipe out the wealth of the savers or do we devalue debt people are carrying?