patrick.net

tiny tina says

didn't buy until the bubble burst.

Problem is, the bubble has just begun to burst. We are still only in the 4th-5th inning of the burst. That's what Peter Schiff is saying now, because he sees this fake economy for what it is, and you don't. When the bubble does implode, completely, you, who bought in 2009-2012 will look just as ridiculous as someone buying in 2006, so your argument about everyone predicting the bubble will no longer be valid.

tiny tina says

The proof is that some people on this board sold in 2006

Anyone can claim on the internet that they bought in 1995 and sold in 2006 all day long. That certainly wasn't the norm.

I'm also not saying that no one knew the bubble was coming, but Schiff was one of the first to describe the reasons behind why housing was due for a crash and predicted more or less how it would unfold. He was calling it in 2002 before Patrick.net was a housing blog.

Like I said, in hindsight, anyone can claim they knew "it was coming", but that certainly wasn't the norm, or else this economy wouldn't be in the situation it is now.

dunnross says

Problem is, the bubble has just begun to burst. We are still only in the 4th-5th inning of the burst. That's what Peter Schiff is saying now, because he sees this fake economy for what it is, and you don't. When the bubble does implode, completely, you, who bought in 2009-2012 will look just as ridiculous as someone buying in 2006, so your argument about everyone predicting the bubble will no longer be valid.

If you're so confident in that assertion, I urge you to "go short" and make a fortune. Make the rest of use look like fools.

Goran_K says

Like I said, in hindsight, anyone can claim they knew "it was coming", but that certainly wasn't the norm, or else this economy wouldn't be in the situation it is now.

Obviously it wasn't the norm. No one ever said it was. If you are going to accuse others of using strawmen, don't do it yourself. Just because it wasn't the norm doesn't mean many people didn't see it coming.

This isn't hindsight either. You don't have to believe others like myself waited until after 2009 to buy because we saw the bubble, but it is reality whether you want to acknowledge it.

A good recent example is Edvard. He rented for ~10 years waiting for prices to get reasonable. Is he special too?

Goran_K says

The dollar index went from a high of 88 to a low of 73, in 2010. But Schiff was talking about the purchasing power of the dollar, not it's index value. So, in terms of how many barrels of oil can the dollar buy, the oil price went from $70 to $110, which is more than 50%. Schiff was right on the money, there

REALLY?!? He was talking about the purchasing power of dollar relative to gold and oil? but not to corn or RE or silver or pork bellies?

C'mon, he was talking about purchasing power of dollar to other foreign currencies.

The fact is that there have ALWAYS been people extolling the virtues of gold and bearish on housing. Since both work in cycles, someone is always going to be right. It's getting the timing that's tough

I don't understand "fighting" over investment topics. Why don't the bulls and bears just place their respective bets and move on?

tiny tina says

This isn't hindsight either. You don't have to believe others like myself waited until after 2009 to buy because we saw the bubble, but it is reality whether you want to acknowledge it.

No one is using strawmen.

My point is, you, your brother's third cousin, or any other anecdotal story isn't special or worthy of mention, especially from "internet tales". You actually have a habit of doing this. Remember the affordable SFH in nice areas of the Bay Area debate? You claimed to know "areas" where this was possible, but refused to give a city, or even neighborhood. That's just like now, an internet tale. Anyone can go on the internet and say "I knew that was going to happen", that's not special.

Sure, you knew housing was going to crash. You knew gold was going to rise. Then why aren't you and your friends all multi-millionaires enjoying the Malibu sun instead of claiming you knew all these things were going to happen on Patrick.net.

Like I said, you, and any other person who claims AFTER the fact that you knew things were going to happen isn't very special.

Going out into the public on national TV, 4 years before the crash, and doing it in the face of harsh criticism from your peers is.

zesta says

The fact is that there have ALWAYS been people extolling the virtues of gold and bearish on housing. Since both work in cycles, someone is always going to be right. It's getting the timing that's tough

That's the thing. You and people like tiny tina keep insisting that what Peter described in 2002 wasn't special.

Sure, it's easy to say that in 2012, after the fact, but where were you and tina's publications or even web articles stating that housing was heading for an imminent crash, and that Gold was going to triple in price.

Why aren't you two nationally known economist that get paid lots of money to talk about the economy like Peter Schiff?

When it comes down to it, two anonymous internet trolls who think they "knew" how things were going to go down is meaningless, and that's why Peter Schiff is a nationally known economist whose opinion people pay for, talk and write about, and why you two troll on Patrick.net for free.

Goran_K says

No one is using strawmen.

You did, but that's ok.

Goran_K says

My point is, you, your brother's third cousin, or any other anecdotal story isn't special or worthy of mention, especially from "internet tales". You actually have a habit of doing this. Remember the affordable SFH in nice areas of the Bay Area debate? You claimed to know "areas" where this was possible, but refused to give a city, or even neighborhood. That's just like now, an internet tale. Anyone can go on the internet and say "I knew that was going to happen", that's not special.

I think you are attributing someone else's quote to me.

Goran_K says

Sure, you knew housing was going to crash. You knew gold was going to rise. Then why aren't you and your friends all multi-millionaires enjoying the Malibu sun instead of claiming you knew all these things were going to happen on Patrick.net.

Yes, I knew housing was going to crash. I'm surprised you didn't. I had no idea gold would rise. By the way, your comment about "knew all these things" is again a strawman. Maybe look it up if you are going to keep doing it while insisting you don't. I said I knew 1 thing - housing was in a bubble. The evidence is me not purchasing until after 2009, like it or not. The additional evidence is Edvard not purchasing until this year. The even more evidence is the many posters on here who thanked patrick for the website and said they were signing off in 2009, 2010 and 2011 after they purchased when they felt the bubble had burst.

I know Goran won't read this, but his blindness is astounding. Here's a quick story:

Gold is at 100 today and I say it's in a bubble
then it goes up for 4 years to 250
then it crashes back to 100 over the next 2 years.

Was I a prophet?

What if it had stayed at 100 for the next 6 years? Would I be wrong then?

Goran_K says

You did claim that you knew of affordable, cash-flow positive, SFH in NICE parts of the Bay area and when I called you out on it, you refused to give a city, or even ZIP code.

That's absolutely not true. I gave you specifics all the way down to a house in Cupertino. And yes, it wound up being a discussion based on "cash-flow" and your piss-poor initial definition which wound up being clarified...eventually.

My definition of "not special" is making 10 predictions and getting 1.5 correct (housing being a sort of considering he made it way too early).

If you want to follow Schiff as an oracle - go ahead. I just wanted to point out he has made a few mistakes. If you are being objective, I'm not sure why you would ignore those. Moving on.

tiny tina says

That's absolutely not true. I gave you specifics all the way down to a house in Cupertino.

You did that to the universal mockery of the forum, and 7 dislikes on your posting. But yes, let's move on, I think that would be best.

Bulls and Bears:

Place your bets.

Anyone can make a fortune investing with 20/20 hindsight. Even me!

wthrfrk80 says

Anyone can make a fortune investing with 20/20 hindsight. Even me!

Exactly. My. Point.

Monday morning quarterbacks have a 100% success rate.

I guess I don't get the monday morning quarterbacking. I bought a house in the BA after waiting for many years. There's my bet.

If you guys are bears, go short the housing sector or whatever. Publicly document your transaction. Waiting...

doo-da-doo

So, any bears or other followers of Schiff going to post their recent shorts of the market? What happened to "place your bets"?

Are you sure those are cash-flow positive? One of them isn't even for sale, it last sold for $710,000.

Goran_K says

That's the thing. You and people like tiny tina keep insisting that what Peter described in 2002 wasn't special.

Sure, it's easy to say that in 2012, after the fact, but where were you and tina's publications or even web articles stating that housing was heading for an imminent crash, and that Gold was going to triple in price.

Why aren't you two nationally known economist that get paid lots of money to talk about the economy like Peter Schiff?

When it comes down to it, two anonymous internet trolls who think they "knew" how things were going to go down is meaningless, and that's why Peter Schiff is a nationally known economist whose opinion people pay for, talk and write about, and why you two troll on Patrick.net for free.

Well first off his timing in 2002 was wrong. This had brought up multiple times by multiple posters, but I'll try it one more time. Scientific evidence tells me that our sun will eventually become a red giant and the Earth's time will come to an end. The "fundamentals" are there. Now, am I an oracle if I say: "The world is coming to an end" In your eyes I would be right, because I'm basing it on solid evidence.

Do a quick search on the internet and see how many people you can find that predicted a huge pop in gold. It happens during every crisis and conflict.

At the very least, can you admit that he's not 100% correct? There are many instances that have been brought up where he's either been wrong in timing or wrong completely.

What does it matter that people pay him to talk/write and invest. As mentioned earlier, people pay Ben Bernanke and his predictions don't mean anything.

robertoaribas says

I predicted that housing would crash in 1965... OK, so I was approximately 41 years early, I was still right!

I predicted talking pictures...in 1968!

The reason Schiff is wrong is that the stock market is exhuberant since Bernake keeps interest rates so low and Europe is so fuct that people buy mega large stocks when they realize there is no other game in town.
1. Deposit in a bank. You nuts? Lending your capital and being paid nothing?
2. US Treasury debt? See #1.
3. Gold? It's never going to grow or appreciate capital and compounding interest also does not apply. It will preserve your money so it's slighty better than money in a bank.
4. Anything else?
Schiff can give us the logical reasons people with money won't buy things like stocks. The problem is they don't care they are more afraid of being broke in 10 years than their fear of the stock market possibly collapsing.
Stocks, dividends, corporate bonds compounding, etc. makes money over time.

clambo says

3. Gold? It's never going to grow or appreciate capital and compounding interest also does not apply. It will preserve your money so it's slighty better than money in a bank.

In the last ten years gold has outperformed the S&P 6x1. However, since they are still lots of people like you, who are saying that gold is just for capital preservation, it will continue to outperform the market. Look for Gold to Dow ratio of 1/1 within the next 2 years.

dunnross says

Look for Gold to Dow ratio of 1/1 within the next 2 years.

Are you putting your money where your mouth is?

Anyone can make predictions. How many are willing to bet money on those positions?

Goran_K says

How was it wrong? He never said housing would crash IN 2002.

When you watch his videos and read his quotes, what year do you think he was predicting that housing would crash?

I don't care about gold because it 1. cannot grow (i.e. get heavier in my safe) 2. cannot pay dividends 3. cannot pay interest.
TODAY gold is expensive and I would buy some if I were rich but I would rather just have a Swiss account and be done with worrying about our US Dollar becoming ever more worthless.
AAPL can 1. pay divends 2. grow business 3. grow profits
They only sold 72 millon iPhones in the last 6 months, such a pity.

However, I told my father 3 years ago if I were in his shoes and wanted to play around with that cash in the coffee can he does not need he could buy 1. swiss francs 2. AAPL 3. gold etf, backed by swiss bank gold deposits.
I believe the gold eft is "zkbgf".

robertoaribas says

takes horse blinders!

Blinkers.

clambo says

TODAY gold is expensive and I would buy some if I were rich but I would rather just have a Swiss account and be done with worrying about our US Dollar becoming ever more worthless.

Gold is not expensive. Even, if you believe the faulty gov't CPI numbers, in real terms, it's still cheaper than it was back in 1980. Silver is cheaper than it was in 1980, even in nominal terms. Do you know anything else in the world which is cheaper now than it was back in 1980? For gold, it costs close to $1000, today, just to take it out of the ground, not to mention, that you have to find it, research it, and construct the mine, which takes 5-10 years. AAPL is expensive. Its stock price is almost 6 times its book value. It's basically a toy company, and toys are the first things people can live without, in a recession. Gold does pay dividends (0.5% annual lease rate), unlike AAPL which pays no dividends.

robertoaribas says

is the dow jones under 2000?

This secular bear market isn't over yet. Schiff predicted that the bear market would start in 2000 (which it did), and would last for another 5-10 years after that, but, what he didn't consider was the FED trying to re-inflate the bubble, every step of the way, which leads to a giant extension of the bear market. As it stands now, this bear market will probably last for another decade or two, and because of inflation, the DOW will probably not fall to 2000. However, in real terms (ie 2000 dollars), it would probably fall below 2000. A good way to track the "real price" of the DOW is to consider its price relative to ounces of gold. In 2000, the DOW was around 12K, and gold was $300, which would mean that 1 DOW could buy 40 oz of gold. Today, the DOWN is again 12K, but gold is $1600, which means that 1 DOW can only buy 7.5 oz of gold. So, in terms of the gold currency, the DOW is now down 5.3 times from the peak, which means, in 2000 dollars, it's price is now $2250, quite close to Schiff's lower estimate of $2000.

dunnross says

Gold is not expensive. Even, if you believe the faulty gov't CPI numbers, in real terms, it's still cheaper than it was back in 1980. Silver is cheaper than it was in 1980, even in nominal terms. Do you know anything else in the world which is cheaper now than it was back in 1980? For gold, it costs close to $1000, today, just to take it out of the ground, not to mention, that you have to find it, research it, and construct the mine, which takes 5-10 years. AAPL is expensive. Its stock price is almost 6 times its book value. It's basically a toy company, and toys are the first things people can live without, in a recession. Gold does pay dividends (0.5% annual lease rate), unlike AAPL which pays no dividends

Valued in gold, housing prices are pretty much at historical lows. Lower than in 60s and 70s. Does that make housing exceptionally affordable?

zesta says

Valued in gold, housing prices are pretty much at historical lows. Lower than in 60s and 70s. Does that make housing exceptionally affordable?

That depends on where you are looking. In mine and patrick's neck of the woods, it still takes close to 1000 gold coins to buy anything even resembling a house. In 1980, this same house would have been worth only 100 gold coins. That means that houses in the Bay Area are still extremely overpriced.

robertoaribas says

But you really need to get help for your pathetic jealoous obsession with me...

Ya right! I am jealous of a Berkeley flunk-out who lives in a 120 degree heat and thinks that he knows math.

Sheesh I didn't know investing could get so personal. At least on a stock exchange floor the bulls and bears fight each other in a totally anonymous, impersonal manner.

zesta says

Valued in gold, housing prices are pretty much at historical lows. Lower than in 60s and 70s. Does that make housing exceptionally affordable?

That's the thing. Value is all "relative." There is no "absolute" yardstick.

It's all about RELATIVE scarcity. If dollars are plentiful, and gold is scarce, you will have to trade a lot of dollars for gold. If a bunch of gold is discovered or dumped on the market via Cash4Gold, the scarcity of gold will drop relative to dollars (assuming "helicopter Ben" doesn't print any more money). Same with dollars to silver, euros to dollars, silver to bread, bread to oil, etc etc. Same principle.

I don't know of any asset who's value remains absolutely constant relative to the value of a basket of every other good/service.

To me, investing seems like millions of people in a huge room madly exchanging "this for that" assuming they know "this" will go down in value relative to "that."

dunnross says

A good way to track the "real price" of the DOW is to consider its price relative to ounces of gold. In 2000, the DOW was around 12K, and gold was $300, which would mean that 1 DOW could buy 40 oz of gold. Today, the DOWN is again 12K, but gold is $1600, which means that 1 DOW can only buy 7.5 oz of gold. So, in terms of the gold currency, the DOW is now down 5.3 times from the peak, which means, in 2000 dollars, it's price is now $2250, quite close to Schiff's lower estimate of $2000.

You have to be kidding. If not you are one confused puppy. Talk about convoluted.

You could similarly make an argument that somehow the dollar inflationary fears or expectations reflected in the price of gold, simultaneously indicate the all time worst deflation we have even seen.

Who knew ? That is, who knew that everything from the price of a car, the the price of bacon or shoes, had dropped by so much ? By your reasoning, even the price of college or health care "in 2000 dollars" is way less then a third of what it was then.

Who knew ?

marcus says

Who knew ? That is, who knew that everything from the price of a car, the the price of bacon or shoes, had dropped by so much ? By your reasoning, even the price of college or health care "in 2000 dollars" is way less then a third of what it was then.

Who knew ?

Yeah it's great! The gold coin my grandpa gave me back in 2000 can buy so much more stuff now! We're so much more efficient than we were back then! And we have so much more farmland and oil than we had back then and far fewer people in the world to consume it!

Or maybe it's just that markets are efficient. And the "inflation paranoia factor" is already "priced in."

Good luck to all of you gold bugs out there...

Clearly gold is immune from speculative frenzy and should be used as an absolute frame of reference. ;-)

wthrfrk80 says

Clearly gold is immune from speculative frenzy and thus should always be used as an absolute frame of reference. ;-)

Gold is not immune to speculative frenzy. However, you know that gold has been around since the Babylonian war, and all the fiat currencies which ever existed had to succumb to it, in the end. One thing, for sure, is that all the currencies in existence today will not be around 100 years from now, but the gold currency will live on, and you will still be able to buy a tailored suite (or its equivalent) for an oz of gold 100 years from now, just like you can today, and just like you could 100 years ago.

marcus says

By your reasoning, even the price of college or health care "in 2000 dollars" is way less then a third of what it was then.

Yes it did, because since 2000 we are living in a deflationary world (exactly like Peter predicted). Only the suckers who worshiped the all-mighty dollar lost purchasing power. But, if you keep worshiping the all-mighty dollar, you will lose even more. Just ask some people in Argentina, Brazil, Soviet Union or Zimbabwe how their currencies fared against the govt who is deep in debt like ours is, today.
And when you say - who knew? I know 2 people, 1 is myself, and the other one is Peter Schiff.

dunnross says

One thing, for sure, is that all the currencies in existence today will not be around 100 years from now, but the gold currency will live on, and you will still be able to buy a tailored suite (or its equivalent) for an oz of gold 100 years from now, just like you can today, and just like you could 100 years ago.

True, but if you buy gold at a peak you'll still lose. Big time. And after 100 years we're all dead.

wthrfrk80 says

And we have so much more farmland and oil than we had back then and far fewer people in the world to consume it!

Gold price has surpassed it's pre-recession all time-high. None of the other commodities have. Does anybody on this blog have an answer to why gold is the only commodity that surpassed it's pre-recession high? Wait I do. Because gold is not really a commodity. Unlike all the other commodities (including housing) it's not tied to the credit market, which is currently unraveling itself, so its price is a direct measure of how much "real money" or the so-called "reserves" is going into the economy from all the money printing. All the other commodities are tied to the "credit money" which is the multiple of the "real money" which the central banks are printing, and this "credit money" is deflating faster than the FED is trying to inflate the reserves. This inflation is not like the one we saw in the 70's. It is a so-called depressionary inflation, which means that the "real money" supply is growing, while the credit supply is collapsing. This is exactly how Peter explains it, too.