gold is indeed looking great!

and with stories like this

"Ponzificating"

"Sustaining the unsustainable"

and the daily action from the treasury and the fed

http://immobilienblasen.blogspot.com/

it should look alot better in the future...

have a nice weekend

Bill,
I am glad you are resting. Please get well and thank you for all you do.
Tom

The CPI data was reported as "mixed" by MarketWatch.

http://www.marketwatch.com/news/story/februarys-cpi-rises-04-food/story.aspx?guid=%7B78E625BB%2DB2A7%2D4A34%2DA293%2D21EF455E720C%7D

But the futures show a negative reaction. The only curious thing is the way the home mortgage companies are still in rally mode (LEND is opening strong again on news it sold some of its junk at deep discount - talk about your pyrhric victories!).

Anyway, this is a great day to get additional rest, Bill. Take care.

Overslept, did you? Goody!

Now go back to bed and rest some more.

Listen, please, to Mrs. Cara. Please!

They are already spinning, especially the industrial production numbers (motor vehicles etc. was great!). Anyway, today quadruple witching will take over and best to watch and stay away from equities unless things get extreme. Good luck and chillax!

DOW is up on speculation of takeover/buyout talk.

After the whole Walter Reed debacle last week I felt comfortable to buy the dip in Gold.

The only way the US government can bring the health care issue for veterans to a level that is acceptable will be by throwing lots of money at the problems.

The Democrats are trying to pull the fiscal plug on Iraq but health care for Army vets will get bi-partison spend spend spend support. So, unless Bush and Congress raise taxes the money printing will continue. The Dems are also powerless to stop the funding in Iraq because Bush will veto their legislation and Cheney is the tie breaking vote in the Senate.

Gold = up up and away for the time being.

Recent strength in DOW (5+% yesterday) is mostly the reflection of takeover rumors reported out of Europe/India. In mid-January and again at the end of February (after TXU deal), foreign press mentioned possible private equity buy-out.

Now, Dow seems poised to take a minority position in a $20-bn JV with India's Reliance Industries (Dow launched a JV with Saudi Aramco last year). But takeover rumor by Reliance (with private equity support) keeps resurging in the background.

JML

"Newmont Mining Shares Rise After Report of Possible Barrick Bid"

Bloomberg link
http://tinyurl.com/2pkqsj

Today it'll be a good day for US stocks. After all, they must suck my Put Options at 1400 SP500 ;-)

A nice report about how Commodities Outperform during equity market downturns. Worth reading.
http://seekingalpha.com/article/29744

57B injected into the primary dealers in the last 2 days alone, according to Mr. Fry: http://www.etfdigest.com/daveDaily.php

Does anyone know if these levels are routine?

GLD thru its December high this morning. Long GLD. EGO moving nicely--Long EGO.

GSS up on upgrade-No position.

Yesterday while in a car, I was listening to the 24 hr news radio station in Chicago. A mortgage ad came on and the company advertised now was the time to obtain your mortgage--NO CREDIT SCORE REQUIRED! A little while later another mortgage firm came on and also had enticements to easily obtain a mortgage. Maybe it's just me, but the elevator doesn't go to the top floor for some of these people.

Sign of the times: Usually the wine discussion is Friday evening on this blog. It started Thursday evening. Maybe time to look again at Dieago or the illiquid South American wine importer VCO. No positions.

Good luck out there.

SiO2,

The last two days definitely show a pick-up in open market activity (compared to the month at least). Late last year (Nov./Dec.), these liquidity injections seemed to occur more frequently as the market marched higher (I recall also that bids accepted below Fed target rate were frequent). For more historical information, check NY Federal Reserve site: http://www.newyorkfed.org/markets/openmarket_concepts.html.

While last year's liquidity injections followed normal seasonal patterns, I was under the impression that, in late winter/spring time, liquidity is usually drained from the system (albeit slowly). It is worthwhile to monitor closely to see if these recent operations are indicative of a deliberate effort to soothe liquidity contraction by the PPT.

JML

I'm a new reader (this is a very interesting blog), and have been browsing through a few previous posts.

Anyone have time to share some info on the best way to buy maple leafs/eagles?

Yes Seamus it is early, so I will wait until tonight to indroduce my Lambrusco selection from Puglia ;)

Gad42: re purchasing gold coins...

read yesterday's thread...the 1st one...lots of suggestions...

Sign of times:

Private equity firm Blackstone Group is working with investment bank Goldman Sachs Group Inc. to launch an initial public offering of the firm, business news channel CNBC said on Friday.

I have gotten fond of Bill and his website. Beautiful top down view, even with all the details of 100 stocks. Makes the little guy feel informed. Straight talk makes a much easier read. I scaled again into GLD this morning. I would like to accumulate more, but I'm wondering if the price is now out of a safe accumulation range. Any thoughts?

ps I am conflicted about references that imply worse depression than the Great Depression. I hope that these predictions are influenced by political values. As a child I had more than one relative sob when recalling past hardships. I'm surprised that posters "seem" to accept this prognostication. Perhaps, I over interpret.

The body responds well to sleep. Glad to hear Bill's getting more of it.

Tells for the PMs.

Nice move by the Euro overnight thru 133. So far the NY traders haven't pushed it back down. It may test its high over the next month or two which will be real positive for PMs. Let's see if it holds.

Switzerland raised it's rates unexpectedly. Some hedge funds also used the Swiss franc (like the yen)in a carry trade with other high yielding currencies because its interest rate was so low. Could see some unwinding here also. The franc is strong against the weakening dollar this a.m.

Anyone catch the Chinese Feb industrial production #? --it rose 18.5%! No slow down there.

Joey -
Actually read that thread yesterday morning but never got back to it. Very helpful. Thanks.
Gad

Lelik

Unfortunately
"A nice report about how Commodities Outperform during equity market downturns. Worth reading.
http://seekingalpha.com/article/29744"

seekingalpha indicates that it cannot find article. Perhaps it is already removed. Or a possible typeo?

RE Depression.....

Well, I sure don't have a crystal ball, but I still remember (I remember and I wrote it down)Sandra Ward's (Barrons, 06.05.06) interview with Steve Romic. Here are my notes from that interview:

~ Much risk in the system
~ preparing for the biggest consumer slowdown since the Great Derpession
~ Not a target rich environment
~ 50% of MEW's end up in the economy
~ 5 month supply of house on the market
~ real inflation in the system

Jasper -

The Great Depression was a result of the end of the credit cycle as credit contracted. The reason people on this site are so afraid is because they anticipate the end of the current credit cycle. US Debt as a percentage of GDP is larger now than in 1929. Speculation in assets of all kinds is rampant and the average American has a negative savings rate for the first time. Government spends money it doesn't have with not a thought as to how they will ever pay it back. Politicians will delay the economic pain as long as possible. This is a recipe for disaster and with no responsible leadership in sight we can not mitigate the results.

The credit cycle may not end this year but it will end at some point in the future as it has repeatedly over the course of history. The users of this site recognize this and want to be prepared because the effects can be devastating to the economy. The Great Depression was not a one time event but a part of the credit cycle.

Sounds like your futures brighter Bill...I'm sure your first option would be to get back in the straddle again...sorry-I could resist-but humor (even bad humor that pun ishes you) seems to be a commodity in short supply these days.

Bill,

Sleep, bed rest, and good dreams help heal your body and keep your spirits lively.

Enjoy a three day weekend. It looks like NYC has a 'snow day' anyway due to storms, no flickering lights on the stock pages. Likely all are needing a little rest.

Thank you once more. BBC

moab:

thanks for the thoughtful response. i, too, wonder when the chickens will come home to roost. as far as i know the war is off the books. gov't debt is understated, big time. The Great Depression had disinflation..i think, not sure. Cash was king then.Leisa indicates that others are predicting inflation, this time around. Overall, it's just that this is a very serious fear that could keep folks from not investing at all...i'm thinking of myself. I want to respect risk but not over react.

Commodities Outperform during equity market downturns.

Sorry to all: it seems that the link I gave you does not work anymore. Maybe they removed the article. Anyway the report showed a statistics about the 10 and the 20 worst months in the last 25 years (about) of the SP500 index and comparing it with other indexes. Foreign equities had a high level of correlation, while commodities (using the DJAIG index) showed a low level of correlation, and even they performed positively during the downturns, on average. Here I found at least a graph:
http://www.cobraf.com/ForumF/immagini/R_76376_1.gif

"Leisa indicates that others are predicting inflation, "

To be fair about the comment, Steve was indicating that in June of 06 there was real inflation in the system. In fact, it was the opinion of people like Steve and G. Dagnino that persuaded me not to enter bonds. And they were right.

So when you have real inflation that is above the fed funds rate (remember the folks that were respectably calling for the FED to raise rates last year because of this?!) you get the mess that we currently have.

This from Carol Lloyd in SFGate.com this morning:

In the current real estate market, an accurate appraisal is more important than ever

By Carol Lloyd, Special to SF Gate

Friday, March 16, 2007

With the Bay Area real estate boom splitting into so many divergent microtrends -- some neighborhoods careening southward, others chugging along, with still others gaining speed despite all odds -- the necessity of an accurate appraisal has become more crucial than ever. Hired by lenders or mortgage brokers or sometimes attorneys, real estate appraisers determine the value of a property by looking at recent sales of comparable properties, doing inspections and analyzing the larger market. Unlike real estate agents, brokers and lenders, all of whom get paid on commission, appraisers are just about the only ones who have no vested interest in the deal going through. Instead, they get paid for their work by the job: usually between $100 and $500, but sometimes as much as $2,000 for a massive rural estate.

Yet in an era when people have increasingly used their homes as giant piggy banks through serial refinancing or are selling their homes with the expectation of early retirement, more appraisers are feeling the uncomfortable sensation of many parties breathing down their necks and pressuring them to keep home prices up.

Last month, a survey of the national appraisal industry conducted by October Research Corp. reported that 90 percent of appraisers feel pressure to inflate the value of homes to meet expectations -- be it a purchase price or an estimated value for a refinance.

Of course, this isn't the first time evidence of appraiser pressure has been aired. Just four years ago, during the boom, a similar study found that a full 55 percent of appraisers had had lenders, brokers or owners attempt to inflate their values. In 2005, Jonathan Miller, appraiser and bubble blogger, launched Soapbox to "vent" about the "pressure myself, my firm and my profession was under to make the number 'or else.'"

"It seemed that no one really cared about ethics or the risk placed on [the] banking system," he wrote recently. "Appraisers were fast becoming the enablers to fraud and a whole lot of 'gray areas' that I wanted no part of."

In a boom market, meeting the expected price was not as hard to do. Everyone was making lots of money and less anxious about each individual deal going through. But now that sales volumes are down, re-fi fever has cooled and some markets have softened, mortgage brokers and even lenders try to set their target value in advance of hiring their appraiser. This leaves the appraiser caught between a house and a hard place.

"Internet-based mortgage companies call all the time," says Curt Thor of Real Estate Appraisals Association of Northern California and a Marin appraiser with North Bay Real Estate Appraisals for over 20 years. "They're fishing for appraisers. They tell me what the number is and ask me if I can match it."

Thor says he typically won't even look at such offers because if he can't match the number once he visits that house, he knows he'll find himself battling with mortgage brokers over being paid for his time. Once when this happened, he filed a complaint about the broker with the Department of Real Estate and copied the broker's boss. "I got a check very quickly," he told me.

John Philipp, an appraiser based in Sonoma County, says that he's experienced similar "dialing for appraisals" when mortgage brokers routinely call and ask him to complete a "comp check" before offering the appraisal assignment. "[T]hey want me to research the subject property and based on county information do research thru the MLS and give them a value before seeing the property. Sometimes they tell me what value they need to make their loan go through, which is illegal. The appraiser is not supposed to be made aware of the owner's estimate of value, or the value that is needed to make the loan, so as not to be influenced or have a predetermined number prior to the inspection," he writes in an e-mail about refinance appraisals. "[B]asically, the broker wants an appraisal without having to pay for it."

Philipp knows from experience that these brokers are not a source of future business. "Once I advise these callers that I don't perform this service and that it is illegal to even ask, I don't hear from them again."

Indeed, all the appraisers I spoke to -- no matter their county -- mentioned that times were increasingly tough -- especially for ethical appraisers who refuse to cook the numbers. Also, the industry has recently been flooded with newly licensed appraisers (according to one expert, the number in California has doubled in recent years).

"The professionals are generally leaving the business or going into other areas of real estate appraisal -- like legal cases," explained Miller. He says that the pressure on appraisers has been growing since the 1990s, when banks began to eliminate their in-house appraisal offices and outsource the business of managing appraisals to appraisal management companies. Suddenly, mortgage brokers -- who may have the biggest stake in the deal going through -- were in the business of hiring appraisers directly.

Miller, who sometimes "reviews portfolios" for large lenders by looking at a pool of 50 to 100 appraisals and judging their accuracy, says that at least in his area --Manhattan -- the pressure on appraisers is working. "About 90 percent of the appraisals I've reviewed are about 10 to 11 percent inflated," he says. "It's amazing -- it gets me really angry."

From the looks of it, the profession faces an uphill battle.

Finally, even as it may become more necessary to get a professional appraisal of a house in a fluctuating market, "point and click" valuation services like Zaio -- which announced this week that it would add 100,000 homes a day across the country to its instant appraisal database -- may make consumers expect that getting an appraisal is as easy as a credit report.

How might the decline of accurate appraisals influence the consumer? It's hard to say. On the one hand, buyers, sellers and refinancing homeowners tend to be as impatient as anyone to push the deal through. And who really cares if the appraisal is done by a computer or a person, or managed by a middle man?

But in the long run a practice of lending based on inaccurate or inflated valuations could be dangerous to the banking system, a network of institutions whose mistakes the American people generally foot the bill for. The bad real estate deals that led to the savings and loan bailout of the 1980s were often founded on inflated appraisals. And if the largest lenders in the country don't know what they've got on their books, it corrupts the system as a whole. The investors -- like pension funds -- who buy the loans are not getting accurate information. Eventually, this could make it harder for lenders to sell them and thus reduce liquidity for new loans.

Or as Miller put it: "Garbage in -- garbage out."

Jasper -

I think we are at a turning point. If the credit cycle ends we will have deflation, with cash king as people need it to pay back debt. If we can delay the credit cycle end further then we will likely get inflation as central bankers try to reduce the burden of debt in the economy, which is defined in nominal dollars. This occurred in the 1970's and led to the bank failures of the S&L crisis as the loans made earlier were paid back with nominal dollars that were worth much less after the double digit inflation of the time.

If 30 year T-Bill rates rise above their 25-year down trending channel it may indicate deflation/contraction winning as easy credit disappears.

Gad42. Here is a goodplace to start. Maple Leaf is by far the best in the world. There are other sites you can visit and of course you can buy bullion and wafers. I prefer dealing with The Bank of Nova Scotia for my purchases, but I'm sure there are many reliable sourced ready for your business.

http://goldinfo.net/mapleleafs.html

the Gov’t has been the RE enabler for many years, tax advantages, capital gains (very special), VA,FHA,Fannie credit line, special community financing, the list goes on and on.I doubt that the very illiquid RE industry could survive without significant gov’t support. The idea that the gov’t will do some type of bailout is coming just who gets saved and by how much is the only question.
As this situation unravels I am beginning to understand why Japan was unable to bring the necessary political and financial pressure to deal with the problem of high LTV loans and properly account for the real market value of the property whether commerical or SFH. The book value of all this property at some point in time will have to be downgraded significantly, which will have a profound impact on America’s financial well being.

What are we Bill 10, 15 years behind Japan? Without question HUGE deflationary period coming for U.S.; P.M.'s the old school cure for deflation not inflation as you well know :)

Gad42,

You can also buy them at a Royal Bank branch. The Canadian Mint (Mint.ca) is a nice site, prices there seem to be much higher as they come in a nice fancy package. Silver 1 ounce coins there are CAD$29.95 (about USD$25), those are around CAD$15/USD13 in a bank, and gold coins are CAD $860.20, just for your reference.

Now, if you wish to sell them back, I do not know what is the typical buy-sell price spread.

as for anyone concerned with inflation, one may want to take a look at a crude oil chart that even though bounced off it's 200 day in January, couldnt even GET to resistance before failing miserably at the
$ 62 range. Ofcourse the govt. botched again; if you cant afford to eat corn you can always TRY to use it to power your car....

Here is Jim Rogers' view:
"Commodities investment guru Jim Rogers stepped into the U.S. subprime fray on Wednesday, predicting a real estate crash that would trigger defaults and spread contagion to emerging markets.

'You can't believe how bad it's going to get before it gets any better,'

"It's going to be a disaster for many people who don't have a clue about what happens when a real estate bubble pops.

"It is going to be a huge mess," said Rogers, who has put his $15 million belle epoque mansion on Manhattan's Upper West Side on the market and is planning to move to Asia."

"Real estate prices will go down 40-50 percent in bubble areas. There will be massive defaults. This time it'll be worse because we haven't had this kind of speculative buying in U.S. history."

"I've sold out of emerging markets except for China."

"This is the end of the liquidity party," said Rogers. "Some emerging markets will go down 80 percent, some will go down 50 percent. Some will most probably collapse."

http://www.reuters.com/articlePrint?articleId=USL1470530620070314

Crumbling housing--sign of the times--California foreclosures. Note the listing on page 3--it's just not L.A. area.

http://www.latimes.com/business/la-fi-perris16mar16,0,1672901.story?coll=la-home-headlines

Rick45--as an aside--it's not corn you won't be able to afford this summer, it's meat as cattle feed grain feed has tripled--quadrupled.

"Rick45--as an aside--it's not corn you won't be able to afford this summer, it's meat as cattle feed grain feed has tripled--quadrupled."

Corn Pops (who remembers when they were called "Sugar Pops"? will be unaffordable. Perhaps the real gold nuggets we should be hoarding.

ALOHA !!

Charts ... We talk a lot about charts on this blog.

Look at this chart and tell me what event took place around 1863. I can see why the US government would want to keep the Iraq War cost out of their budget ... Wars can be summed up in one word ... "expensive". Is it any wonder the US dollar is under pressure?

Link: http://www.nowandfutures.com/download/debt_fed_govt1791-1900.png

Now look at the year 1971 on this chart. Look what happened to government spending in terms of debt once we closed the "gold standard" down.

Link: http://www.nowandfutures.com/download/debt_fed_govt1900-current.png

I am sure if you could chart a gallon of gas or a doctors office visit or the median cost of housing during the same time period it would look eerily similar, especially using "inflation adjusted dollars".

Now look at this chart and tell me how anyone can say gold has peaked. This chart even makes Bill's 2007 prediction of $700USD POG cheap! The power of "inflation" and why the FED wants the POG held down is clearly visible here ... In reality it is not the cost of living that is going up but it is the value of a US dollar that is going down. The super cycle of inflation began in 1971 and the only way it will end is by an economic collapse

Link: http://www.nowandfutures.com/download/gold_cpi_adjusted1970-2005.png

The Fed Funds Rate is a big debate now days. Here is a historical perspective of where those rates went during economic depressions. Look at the scenario from 1920 to 1940. In the 1920s the same thing happened as today only on a smaller scale. The Fed dropped rates to stimulate credit bubbles that inflated stocks, then increased rates to slow credit until 1929 hit and then the Fed Rate tanked almost to zero. The K-Cycle Theory dictates that the Fed Funds Rates are about to drop if history is any guide.

Link: http://www.nowandfutures.com/download/Gold-CPI-FF-Rate(mish).png

And then look what happened to the price of gold(POG)...

I call this "reality" ... If I am wrong then 6000 years of human history is also wrong ...

This ethanol boondoggle will starve millions of people. But Vinod Khlosa will make a fortune. There are already protests in Mexico over the price of tortilla's doubling. This issue was taken up with Bush on his swing through Latin America.

It takes 1 barrel of oil to get the energy equivalent of 1.25 gallons of oil from ethanol. This doesn't even consider the loss of topsoil.

Energy efficiency, solar/wind, and heat mining (geothermal) are the only alternatives.

Moab:
Would you agree with this scenario:

By bail out by the gov, that would be lowering interest rates by the fed. (Although, if inflation is showing in hard data, even distorted metrics, the fed , i think, will do nothing with interest rates. Manipulation will occur other ways.) Then, inflation would follow. The shock would send consumption down and interest rates would follow with reactionary cuts by the fed. Worsing case is that high global interdependency would exacerbate problems. Developing countries would have no one to buy their commodity laden products and default on loans. Another burden would be my generation, the baby boomers. As they retire, would GNP fall and debt/gnp increase with more pressure on the value of the dollar? But, if the sky falls, and I'm holding gold then who is going to buy it? Perhaps i should be glad that Bill et al like Jim Rogers are talking about all this, even if extreme numbers are used. It means a greater liklihood of others talking about it. The light of day can be cleansing of denial. Meanwhile, do you avoid all other asset groups besides PM? Would you not have time to rotate out of non-pm's, though admittingly the big one day sell offs come hard and fast.

Any one been using commodity etfs, such
as DBC(total) or DBA(agriculture)...the latter's rsi 7) is bouncing from below 30?

Jasper -

There are so many cross-currents now it is hard to navigate. The interplay of international currencies and markets (carry trade), political conflicts, ect. it is hard to see what is coming next in the short-term. You have to listed to the markets and what they are telling you is happening.

From my perspective, credit is inflationary as access to credit drives up asset prices, as now. A credit bust is deflationary and asset prices fall. We are seeing a credit bust in subprime mortgages which is affecting real-estate. The question is whether this spreads to the broader credit markets. It wouldn't suprise me. If talking heads are trying to reassure you something is not happening, it probably is. We have seen this time and time again over the last 10 years.

If the government bails everyone out, this will be hugely inflationary as debt expansion continues. If they don't, deflation will set in when GDP growth is not enough to service debts.

Gold performs well in inflationary times as a super-currency but it performs extremely well in a deflation as the government tries to head off the deflation with debt defaults and/or currency devaluation, eventually leading to serious inflation. In 1933 gold was confiscated and devalued, inflating the dollar. Disinflation is not good to gold (1980 - 2000).

Gold is a good bet in the short term, IMO, as no one will deal with the issues until its too late because the remedies are too painful. Politicians like to keep their jobs. I am monitoring the 3 month and 30 year bonds to see what is happening. My understanding - unlike most pundits - is the 3 month T-Bill yield actually leads the Fed intervention by a few months as demand for capital for speculation increases or decreases. The Fed actually reacts after the markets and has little power, especially now. They couldn't head off the Great Depression even with dramamtic rate cuts.

Long rates rise when credit tightens and contraction sets in. They have been in a 25 year downtrend as credit expands. More details on my blog.

I am monitoring those two and the dollar, as competitive currency devaluation is the order of the day which is good for gold.

China is planning to build a lot of Nuclear plants
in the near future and there looks to be strong demand
for Uranium going forward.

http://www.infomine.com/investment/metalschart.asp?c=uranium&u=lb&submit1=Display+Chart&x=usd&r=6m#chart

Also CIGS tech for solar as it does not use silicon.

Quotation of the day :-)

"In Focus

What’s not to focus on today? This has been quite a week."

Priceless!

Buy/sell prices on coins at RBC (in CAD):

Product: GOLD
Quoted Against: CAD CANADIAN DOLLARS As of Date: 2007 Mar 16


RBFG CAD BID OFFER

Product RBC Buys (CAD) RBC Sells (CAD)

Gold Bullion/Bar (per oz) 1 oz 757.51 791.76
Gold Bullion/Bar (per oz) 5 oz 757.51 784.69
Gold Bullion/Bar (per oz) 10 oz 757.51 782.33
Gold Bullion/Bar (per oz) 1 KG REFER REFER
Gold Bullion/Bar (per oz) 100 oz REFER REFER

Maple Leaf Gold Coin 1/20 oz 37.87 58.23
Maple Leaf Gold Coin 1/10 oz 75.75 91.62
Maple Leaf Gold Coin 1/4 oz 189.37 221.28
Maple Leaf Gold Coin 1/2 oz 378.75 427.04
Maple Leaf Gold Coin 1 oz 757.51 823.02

RBC Gold Certificate (per oz) Min 5 oz 757.51 776.44

Moab, Thank you for the post...lot of moving parts. I read more at your blog.

I picked up a few Maple leafs at a nearby stamp & coin dealer... you still pay a premium over spot, but it does not seem to be much different than you would pay by ordering online at kitco.com and I don't pay the shipping/insurance fees.

I am in WI which charges sales tax, but IL is close by and does not charge sales tax on the coins so when I am in that state, guess where I go...

Bill Cara Blog mentioned in an article by Tim Iacono
on Financial Sense web site:

http://www.financialsense.com/fsu/editorials/iacono/2007/0316.html

We are having an ice storm in tri-state ny so I am left with beer, pizza, ncaa tourny and something that should be very interesting...

Barbara Walters interviews Hugo Chavez
10pm est on ABC 20/20
http://tinyurl.com/2w9t2e

Bill, get better soon. Enjoy your weekends everyone!

2nd_Ave

In 2005, I decided to sell a house. I wanted OUT, OUT, OUT. I felt there might be problems. (I guess I was right, but 18 months early.)

At any rate, the house ended up being valued by the appraiser at $5K more than the buyers were paying. Oh! Were the buyers thrilled.

The day before the closing, at the walk-through, a huge pipe broke on the top floor, with the damage going all the way through to the basement. We settled for a repair price at the closing, which was the day after the walk-through.

Turns out, I came out lucky -- and not only on the broken pipe.

The new owners, having sunk a lot of money into making the house we remained friends, so I heard about their extensive kitchen, bathroom and other renovations), found that they could not keep up with the (*groan*) taxes. Long story short: they sold a tad above their total costs and got outta Dodge.

I intend to call the next-door-neighbor and visit sometime. I'd love to find out how this story ends.

But the final denouement may take a few years....

Aloha Kaimu!

Re: your comments about the price of gold in the 1930's

Even if we have a credit crunch and 1930's style deflation, I wouldn't necessarily expect the price of gold to skyrocket.

Franklin Roosevelt was elected president in 1932, and he had some peculiar ideas about economics. For a time, he fell under the sway of a crackpot professor by the name of George Warren from the Cornell School of Agriculture. Warren had convinced Roosevelt that he could cure deflation (i.e., lower the value of the dollar) by raising the price of gold in dollar terms. Warren thought that all commodity prices moved in synchronization, so that if the price of gold were raised, it would also raise the price of agricultural commodities, thereby helping out the American farmer.

So Roosevelt gave the orders that the U.S. Government was to buy all new domestically-produced gold at increasingly higher prices. When this didn't work, they started buying gold on the international markets at increasingly higher prices. This sent the price of gold skyrocketing, but did nothing to raise the price of other commodities such as corn and other farm products.

Eventually the whole scheme was abandoned as a failure, but not before it had created the spikes in the historical charts of the price of gold that you showed us.