Is anyone buying now?!
- Thread starter Canberra Milk
- Start date
Be sure there's sustainable industry. Doubt you'd get a mining town for that price and most everything else is in decline.
Interesting thread. I would have thought it screamingly self-evident that now is most assuredly NOT the time to buy any sort of residential real estate, but it appears that others see things differently!
The sharemarket has been giving me one big headache for the last few months. Maybe its just my brain working overtime with no resolution as to which investment strategy to take.
The argument for buying gold or gold equities (particulalry producers) is neatly summarised in this email I received today :-
"Gold stocks ready for take-off
In the past few weeks every asset class has been hammered as investors panicked. Some just sold everything they had and put their money into cash. In a word where the printing of money by desperate governments is BOUND to cause inflation this strikes us as madness: a sure fire way to see your wealth destroyed. But as we noted, folks are panicking.
Others sold what they could which was liquid merely to cover losses on illiquid positions elsewhere. The net result was that even the ultimate safe haven in either a deflationary or an inflationary environment (gold) has fallen back sharply.
And gold equities have been hammered even more severely. But it will not last. As the printing presses are cranked up across the West the value of the fiat (paper) currencies must fall back sharply and gold will, we believe, move sharply higher. To quote from an article appearing on the ZeroHedge website this week:
The continuation of ultra loose monetary policies and new rounds of QE is supportive of gold in all currencies. Negative real interest rates mean that there continues to be no opportunity cost to own gold which is a key driver of golds bull market.
In time, quantitative easing will be seen for what it is - bailing out banks and financial institutions and a form of currency debasement.
Developments in gold and wider markets this week are bullish. There are continuing signs of very significant demand in the Middle East, India, Vietnam and China. There are reputable reports of shortages of gold bars in Hong Kong, Singapore and Vietnam, of shortages of silver bars in India and delays in delivery and rationing of silver coins internationally.
The CME decision to increase the amount of gold accepted as collateral and the LCH. Clearnets decision to allow gold bullion to be used as collateral shows the financial system is increasingly seeing gold as an asset on a par with cash and bonds.
Enough said.
But what about gold equities? They have lagged gold badly .Why is this and when will it turn. To answer this we turn to Mr Silver, Eric Sprott who writes:
First and foremost: the sell-sides abysmal gold price estimates. Table 1 shows the average gold price that analysts are using to value gold equities today. While the futures market is comfortably forecasting a continuation of todays levels, the majority of sell-side analysts refuse to update their gold price estimates to reflect its recent strength. A rising gold price is normally a bad sign for the broader equity markets, and generally indicates a bearish trend. As bears ourselves, we are completely fine with this, and invest accordingly. But the sell-side has difficulty pairing bearishness with new underwriting opportunities. It doesnt mean you have to believe their price forecasts however.
The second reason is golds volatility. The amount of paper gold and silver contracts that trade on the futures and equities exchanges still dwarf the amount of actual physical trading that takes place. Paper markets continue to set price discovery thereby allowing for dramatic volatility with little or no influence from actual physical fundamentals. In the LBMA market, for example, market participants traded an average 19.6 million ounces of gold PER DAY in July 2011.1,2 Keep in mind that the total gold mine production in 2010, globally, was approximately 86.5 million ounces. Global gold mine production is not expected to increase significantly year-over-year, so the LBMA is essentially trading a years worth of production in less than a week. And this is just ONE market. When you add the COMEX futures and gold ETFs, the paper trading volume becomes absurdly high. When price discovery is dictated by levered paper contracts with no physical backing, it is extremely easy and relatively inexpensive to jostle the spot price around. The result for gold has been many days of extreme downside volatility, despite a strong and consistent overall upward trend. Investors do not like volatility and the constant whipsawing has probably kept many of them away from the gold equity sector as a result.
Thirdly, investors still remember how badly gold equities got crushed in 2008. There was a reason they sold off so aggressively however, they were the most profitable positions investors owned going into the 2008 crisis. Gold equities had enjoyed a strong bull trend going back to 2001, with the HUI Index appreciating by 980% from its November 2000 low through to August 2008. Investor behaviour is fairly consistent: when panic hits, you sell your winning positions first.
Again. Enough said.
The key points here are:
1. Fundamentals could drive gold sharply higher over the next 18 months
2. If you have no gold exposure then we believe you will suffer badly as inflation takes off
3. The reasons gold equities have lagged gold are temporary. There may now be a process of catch up and overtake meaning the big gains are to be made in gold equities."
But if it is looking like we are heading to a deflationary period and will see interest rates soften initially, how will point # 2 play out?........." 2. If you have no gold exposure then we believe you will suffer badly as inflation takes off."
Isn't gold an inflation hedge? I thought in times of deflation, it will be currency that will outperform, not gold and silver.
Happy to be corrected by those that invest in these.
Isn't gold an inflation hedge? I thought in times of deflation, it will be currency that will outperform, not gold and silver.
Happy to be corrected by those that invest in these.
The key point being IF and big IF.
Pieman I suggest you review some of the threads here like
http://www.somersoft.com/forums/showthread.php?t=74429
and comments in the Media on the the possibility of a 30% crash in Australia.
They may disagree but they all agree you cannot compare Australia with USA or UK or Europe.
Back on topic, the best advice I can give is BUY when you are ready and able to do so and JUST DO IT!
For example: A very good friend and I have been buying actively since 2003. We both have multiple properties now. Our policy is to buy when we can in the best area at the time. So I have properties in NSW and VIC and he has NSW, VIC and QLD.
Personally I bought in 2005, multiple in 2007 and again in 2010 and 2011 and about to get another in 2012.
In 2005 I sold out of Sydney and bought my PPOR in VIC and since then both have gone up. PPOR by 66%. Did some guru or study tell me that? No, I bought in great area undervalued that got discovered. Sydney went up as well but hey you cannot hold everything.
In 2007 I was told, don't buy, rates are going up, but they deals stacked up and the bank liked me I bought three and locked rates. Then GFC hit “doomed they said” but surprise, surprise rates went down so I unlocked and then due to demand my CG went up. Did the market tell me to do that? No, everyone said the world was going to end. Many sold out and made a loss assuming prices would crash 30%
I would buy again in Sydney now if the BOSS agreed but she has veto any more purchases until the new PPOR is built, a long story.
My point is, I l have learn't if any serious investor (i.e.multiple properties, not one or two but multiple) then the one piece of advice they all give if they regret not buying more.
Analysis Paralysis is the killer.
Provided your income is secure, your rents are secure, and if worried, lock your rates.
If the banks wants to lend you and the deal is good, NOW is a great time to buy. I only wish I knew this wisdom earlier.
regards
Peter 14.7
Too right. Past performance has been an absolute guarantee of future performance when it comes to property. What could possibly go wrong?
Hello Home Page
Actually I would disagree here. You cannot say past performance is guide to future performance. The stock market is testament to that.
You simply have to have a clear investment strategy and follow it. Learn from mistakes (others preferably) and don't assume one success means you are a guru. Manage your risks, control what you can and "have a go".
The key is to "have a go". If you don't, then you are just a wanna bee, gunna bee, never bee.
Regards
Peter 14.7
Peter and I think in a very similar way.
I just bought another (small dev site)
+1 is buying in the next few months
We'll buy another together next year once Rolf convinces the lenders we deserve some more $$$
because it is a poll it comes up as unread if someone votes but doesn't post - perhaps that's what you are referring to?
fwiw - i'm sitting on my hands, or should i say pile of money.
Is anyone buying now ?
It would be good to know if any of the well known property gurus are still buying property in 2011, eg Jan Somers, Ed Chan, Michael Yardney to name a few who come to mind. If they are not buying in 2011, it may be an indicator that they consider the current market conditions to be too risky ? Has anyone heard anything of substance in this regard ? Cheers.
It would be good to know if any of the well known property gurus are still buying property in 2011, eg Jan Somers, Ed Chan, Michael Yardney to name a few who come to mind. If they are not buying in 2011, it may be an indicator that they consider the current market conditions to be too risky ? Has anyone heard anything of substance in this regard ? Cheers.
If I wasn't looking offshore at markets I'm equally familiar with, I'd probably buy here again too.
I don't care what they are doing. Think for yourself and do your own thing. May be a good time to buy for some, bad time for others. Or you may find better opportunities elsewhere - not just in Australia.
I'm doing bugger all at the moment. My rents are good, and the suburbs I invest in don't seem to be dropping. I figure I'll just hang in there for a while, and focus on finishing paying down my home loan.
