RPData Rismark and ASX introduce daily house price index
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IMO they would be better off shorting the banks (if we see the crash scenario, which I think is less likely than a gradual fall). XFJ down a lot more than house prices say from the late 2010 top.
What's the downside risk in Australian house prices over the medium term? Maybe 15% from here (maybe more if we see a crash)? My capital is doing much better than that elsewhere
Gold?
gold is still in a secular bull run, only a fool or an amature goes on a long term short in this environment for gold
The underlying trading rule:
In a bull market you can only be long, bull spread or out.
For myself i am out.
The time to short gold will be when it starts making lower lows and lower highs.
How about you do us a comparison chart showing the performance of Gold and Silver since the start of the year versus Sydney property??
Real Estate priced in Gold
I don't think you would get much of a result by using data for a 2 to 3 month period.
Look at the Property priced in Ounces of Gold and compare say 2002 to now and you will see that real estate based on median prices has performed poorly.
Median price of a Sydney house in 2002 was 387500.00, gold was around 550 to 600 an oz AUD. So would of cost roughly 640 oz of gold to buy the median priced house. Skip forward 9 year and median has risen to 644 K and at today's gold price it would cost 402 oz .
Means l could now by that house for 37% less than 9 years ago, priced in gold.
I haven't done the figures for Silver but it would be a larger discount.
When gold first hit 1000 it did reverse and make lower tops and lower bottoms as it went back to the 600's, that was only a couple of years ago and now it is at 1700's. I wouldn't be shorting gold anytime soon!!
I don't think you would get much of a result by using data for a 2 to 3 month period.
Look at the Property priced in Ounces of Gold and compare say 2002 to now and you will see that real estate based on median prices has performed poorly.
Median price of a Sydney house in 2002 was 387500.00, gold was around 550 to 600 an oz AUD. So would of cost roughly 640 oz of gold to buy the median priced house. Skip forward 9 year and median has risen to 644 K and at today's gold price it would cost 402 oz .
Means l could now by that house for 37% less than 9 years ago, priced in gold.
I haven't done the figures for Silver but it would be a larger discount.
When gold first hit 1000 it did reverse and make lower tops and lower bottoms as it went back to the 600's, that was only a couple of years ago and now it is at 1700's. I wouldn't be shorting gold anytime soon!!
This is a chart from my blog showing performance of Gold/Silver vs Sydney property (Sydney houses outperformed Gold/Silver for the the first 5 years of last decade, but the metals have outshone it since and have a way to go in my opinion):
http://www.bullionbaron.com/2012/02/aussie-houses-priced-in-silver-and-gold.html
http://www.bullionbaron.com/2012/02/aussie-houses-priced-in-silver-and-gold.html
Without confirming the graph but assuming its accurate isnt there other factors at play?
For instance, total return to include rent? Which only applies to property and not gold (rent etc).
Also ROI of property versus gold given you can leverage property and cannot (atleast no where near as much) for gold?
Put simplistically say gold is predicted to go up 50% and i have $100,000 to invest then that gives me a $50,000 profit or a return on investment of 50%.
If property is predicted to go up by 5% and i have $100,000 to invest then allows me to buy a $1m property rendering a return of $50,000 or a return on investment of 50%.
Now I know there are costs, interest etc etc however the purpose of the exercise is to show even a MASSIVE growth spurt for gold will acheive a similar outcome to a minor growth rate for property in dollar terms or ROI. Now consider this for the long haul year after year property will be a much better investment for the average punter by far than gold will. Gold investing is for the much more rich of us.
You keep reiterating the benefits of investing in gold and other minerals and trying to compare both asset classes directly but this is pointless. You are comparing Apples with a zucchini.
The fact is property due to its tax advantages, leverage, security, rental, ability to further improve its value is a much better investment that gold will ever be.
If i had a billion dollars in cash then I would say gold perhaps is a much better investment because its unrealistic to invest a billion in cash in property for any given year and perhaps for 12 months will store my money in minerals than property. But if i had just 100k I would trying and invest wisely in property.
In short comparing property with gold is an interesting academic comparison, a point for discussion and interest but means very little in the real world you may aswell compare the cost a stamp collection, classic cars or any other asset class.
For instance, total return to include rent? Which only applies to property and not gold (rent etc).
Also ROI of property versus gold given you can leverage property and cannot (atleast no where near as much) for gold?
Put simplistically say gold is predicted to go up 50% and i have $100,000 to invest then that gives me a $50,000 profit or a return on investment of 50%.
If property is predicted to go up by 5% and i have $100,000 to invest then allows me to buy a $1m property rendering a return of $50,000 or a return on investment of 50%.
Now I know there are costs, interest etc etc however the purpose of the exercise is to show even a MASSIVE growth spurt for gold will acheive a similar outcome to a minor growth rate for property in dollar terms or ROI. Now consider this for the long haul year after year property will be a much better investment for the average punter by far than gold will. Gold investing is for the much more rich of us.
You keep reiterating the benefits of investing in gold and other minerals and trying to compare both asset classes directly but this is pointless. You are comparing Apples with a zucchini.
The fact is property due to its tax advantages, leverage, security, rental, ability to further improve its value is a much better investment that gold will ever be.
If i had a billion dollars in cash then I would say gold perhaps is a much better investment because its unrealistic to invest a billion in cash in property for any given year and perhaps for 12 months will store my money in minerals than property. But if i had just 100k I would trying and invest wisely in property.
In short comparing property with gold is an interesting academic comparison, a point for discussion and interest but means very little in the real world you may aswell compare the cost a stamp collection, classic cars or any other asset class.
This is a chart from my blog showing performance of Gold/Silver vs Sydney property (Sydney houses outperformed Gold/Silver for the the first 5 years of last decade, but the metals have outshone it since and have a way to go in my opinion):
http://www.bullionbaron.com/2012/02/aussie-houses-priced-in-silver-and-gold.html
Assuming unlike many you are not negatively geared, but yeah 'its complicated!'
I know many who have leveraged into precious metals, and done spectacularly well recently, but you need to know what you are doing.
Unfortunately I know quite a few people who have had a bath viz property in certain areas too.
You have to be honest with yourself in investing, particularly when it comes to holding costs etc, an many are not, 'talk their book' even to themselves.
I completely agree with you, in the end of the day you can make money doing ANYTHING and on the flipside loose money regardless of the asset class.
The thrust of my argument is comparing gold and property is like comparing apples with oranges. Its purely academic and relates to the headline % growth only and nothing else, there is nothing in these graphs say is "gold is the better investment in terms of % growth only".
Like you said you can leverage gold but no where near like you can with property but this is a side issue and simply highlights how difficult it is to say look at this graph it clearly shows gold is better.
Lets put it this way, if gold had the same leverage, tax advantages as property then you would be insane to say property is a better investment but the fact is there a host of factors that differ the two classes. Personally I simply dont have enough cash to invest in gold to afford my living standards because the dollar return is simply insufficient.
The thrust of my argument is comparing gold and property is like comparing apples with oranges. Its purely academic and relates to the headline % growth only and nothing else, there is nothing in these graphs say is "gold is the better investment in terms of % growth only".
Like you said you can leverage gold but no where near like you can with property but this is a side issue and simply highlights how difficult it is to say look at this graph it clearly shows gold is better.
Lets put it this way, if gold had the same leverage, tax advantages as property then you would be insane to say property is a better investment but the fact is there a host of factors that differ the two classes. Personally I simply dont have enough cash to invest in gold to afford my living standards because the dollar return is simply insufficient.
Agree with some of your points tcocaro, disagree with others.
Leverage will boost profits on the way up with property and also magnify the losses on the down cycle like we are experiencing at the moment. In today's environment many negatively geared investors are having to pay holding costs each week for an asset which is also depreciating in value (there are always exceptions to the rule, e.g. don't waste your time bringing in a development example as of course there are always exceptions).
There is plenty of leverage available for Gold in the futures markets, CFDs, etc.
You will note that a majority of the time Gold is bought up in a thread I am simply defending my position and rarely introduce it.
Leverage will boost profits on the way up with property and also magnify the losses on the down cycle like we are experiencing at the moment. In today's environment many negatively geared investors are having to pay holding costs each week for an asset which is also depreciating in value (there are always exceptions to the rule, e.g. don't waste your time bringing in a development example as of course there are always exceptions).
There is plenty of leverage available for Gold in the futures markets, CFDs, etc.
You will note that a majority of the time Gold is bought up in a thread I am simply defending my position and rarely introduce it.
Actually, if you trade gold,you can be incredibly leveraged and build a massive position in the futures market, You are also fundamentally more liquid, I guess it is just not a part of most peoples experience, we all relate to the property market and it's opportunities.
You can open a trading account with a clearer such as L Quay with 20k or so.
I'm not sure of the value of comparing the markets, as opposed to comparing ones successes within the market, although the one huge difference for me is the liquidity, the ability to jump on and off, and the transaction costs.
Personally I'm worried about the Australian property market atm, and what effect that could have on personal wealth within the economy, but would be happy to be wrong.
hang on.....werent GLD and SVR set up so people could use the stock market to "trade" the price of a comparitively illiquid gold and silver....?
worrying times. i see another HUGE bulbble coming up.
worrying times. i see another HUGE bulbble coming up.
hang on.....werent GLD and SVR set up so people could use the stock market to "trade" the price of a comparitively illiquid gold and silver....?
worrying times. i see another HUGE bulbble coming up.
worrying times. i see another HUGE bulbble coming up.
I understand you can leverage your position but what you refer to as leveraging is really financial poducts which are a step removed from gold... its akin to saying I buy direct units in REITs or shares in REITs etc... however you are no longer trading in gold just as you are no longer trading in property. In short you are an options trader etc and then we decsend into the old age property vs shares argument.
You mention holding costs just as there are transactional costs for traders which depending on your trading timeframe i.e. day, start to add up especially if you have a small investment bankroll. However like you pointed out this is besides the point.
This leaves us, I beleive, where I have stated previously that you can make or loose money in any asset class at any point in the market but this is a property forum where the major thrust is investing in property. There are sites dealing with shares, gold etc. When we talk about property and have comparisons to gold etc its a little frustrating because it means little to most in how to deal with our current portfolio or our next purchase.
Its like a clothes retailer struggling in todays market being told after asking for help on a retailers forum, perhaps you should start mining theres heaps of money in that industry retail sux right now. Yes correct but its unrealistic to jump ship... just as its unrealistic for say a property investor with a growing portfolio who asks whats the best next buy... buy gold its better.
Hope this makes sense and doesnt come across as insulting because I am not trying to be. Nor am I trying to drown out any voice against property but to suggest NOT buying any property in this market and looking at another totally different asset class must assume there is 0 possibility of profiting in a suppressed market, which is wrong and that this is a gold forum which it isnt..
You mention holding costs just as there are transactional costs for traders which depending on your trading timeframe i.e. day, start to add up especially if you have a small investment bankroll. However like you pointed out this is besides the point.
This leaves us, I beleive, where I have stated previously that you can make or loose money in any asset class at any point in the market but this is a property forum where the major thrust is investing in property. There are sites dealing with shares, gold etc. When we talk about property and have comparisons to gold etc its a little frustrating because it means little to most in how to deal with our current portfolio or our next purchase.
Its like a clothes retailer struggling in todays market being told after asking for help on a retailers forum, perhaps you should start mining theres heaps of money in that industry retail sux right now. Yes correct but its unrealistic to jump ship... just as its unrealistic for say a property investor with a growing portfolio who asks whats the best next buy... buy gold its better.
Hope this makes sense and doesnt come across as insulting because I am not trying to be. Nor am I trying to drown out any voice against property but to suggest NOT buying any property in this market and looking at another totally different asset class must assume there is 0 possibility of profiting in a suppressed market, which is wrong and that this is a gold forum which it isnt..
I dont know enough about gold to comment with any authority however if proponents of gold trading then advocate margin lending, option trading to leverage once position then on the other hand argue debt as the reason for the property bubble (which I refute exists) then I feel its a bit of a contradictory position to take.
Further more booms and crashes in highly liquid markets such as trading in shares irrespective of the underlying asset is far more dramatic than property can ever be.
Further more inflation shields much of the risk in property and losses are only crystalised on the sale of the asset whereas a highly leveraged share portfolio you will know about losses because you will be told perhaps daily to cover your position with hard cash then depending if you are indeed in the midst of a crash perhaps then you will be a forceful interested property market observer when you put your house on sale to cover the margin.
However these again are just risks in investing in shares just as there are risks in property investing but given this is an property forum to be honest I only give a sh&t about what the property market is doing and couldnt care less about gold just as I dont care about what classic cars are fetching, the price of wool or oil etc etc.
I read about these in the paper to keep informed just as I watch the news but fundamentally I sit on a property forum to discuss property.
Further more booms and crashes in highly liquid markets such as trading in shares irrespective of the underlying asset is far more dramatic than property can ever be.
Further more inflation shields much of the risk in property and losses are only crystalised on the sale of the asset whereas a highly leveraged share portfolio you will know about losses because you will be told perhaps daily to cover your position with hard cash then depending if you are indeed in the midst of a crash perhaps then you will be a forceful interested property market observer when you put your house on sale to cover the margin.
However these again are just risks in investing in shares just as there are risks in property investing but given this is an property forum to be honest I only give a sh&t about what the property market is doing and couldnt care less about gold just as I dont care about what classic cars are fetching, the price of wool or oil etc etc.
I read about these in the paper to keep informed just as I watch the news but fundamentally I sit on a property forum to discuss property.
Agreed, you can't keep printing trillions of dollars and euro's without a serious pop at some stage....I think you are more likely to see a collapse of the euro before gold and silver reach there eventual highs...and at this stage they haven't reached there inflation adjusted highs from 1980's.
Gold has began to act more like a currency ...Oil for Gold with Iran ... so maybe the beginning of the end for the USD ?????
This is a chart from my blog showing performance of Gold/Silver vs Sydney property (Sydney houses outperformed Gold/Silver for the the first 5 years of last decade, but the metals have outshone it since and have a way to go in my opinion):
http://www.bullionbaron.com/2012/02/aussie-houses-priced-in-silver-and-gold.html
Yes, Sydney house prices fell about 20% in real terms between 2003 and 2008.
Your chart certainly illustrates which asset class (gold or Sydney property) is more likely to be in a bubble right now.
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This 1 unit of measurement by itself is insufficient to call bubble or no bubble in either asset. However it's pretty obvious that we are around middle ground for this ratio (with neither overvalued/undervalued against the other), but yes I do think Gold will head into an overvalued state against Australian property. There is a good chance we could see the ratio return to around 100:1 (GOLD:SYDNEY HOUSE) as we saw in 1980, which would require the price of Gold to quadruple from here or a combination of falling house prices and rising Gold price.
Here is a longer term chart:
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