USA, Ireland, UK, Spain and Japan Property Bubbles versus Australia

[lizzie]

i think that's pretty spot on. We had massive increase leading up to 2003 had we had massive unemployment the buble would have burst instead of plateauing for a decade

But by plateauing for the intervening 8 years, the delay has also allowed wages and mortgage reduction to catch up.

Not to say that massive unemployment wouldn't upset the balance, but it does mean that a large proportion of people are not as vunerable as they would've been in those 8 years.

 

[Shadow]

Your work is actually quite good (regardless of whether I agree with everything you post)

Thanks

you should start a blog on a proper platforum like wordpress or blogger. That said I can understand you want to keep drawing hits to your Australian Property Forum honeypot.

My APF honeypot... LOL, if Alex makes money from the site, I sure don't see any of it! Maybe I should ask him to pay me commission per blog entry.

 

[Ergophobia]

Nice analysis, although I think that a 6 year window is too short from a property point of view.

Also, I dont think you can compare Australia to those countries, japan espically considering the population to land area ratio.

IMO there was no spike in prices in australia, rather property was under valued in 2000.

Looking at the Perth median house price since 1970 when it was 17,500
1980 40,350 +131%
1990 101,125 +151%
2000 156,250 +55%
2010 499,000 +219%

If we correct 2000 based on the long term trend the median should have been ~245k or +142%, which pulls the growth to 2010 down to 104%...

perhaps im just looking for a reason to justify my decisions, but to me its pretty black and white that now is a good time to buy given the fear in the current market.

For other evidence of a bubble or lack there of, just go looking for the vast tracts of empty houses... when you find them give me a call

 

[hobo-jo]

if Alex makes money from the site

C'mon Shadow we both no that Alex Barton is just a persona made up to give the troll forum a legitimate appearance

 

[Indifference]

Gold and silver aren't real money. Money is a medium of exchange. Very few places will accept gold or silver as a medium of exchange. Try buying your groceries from Coles using gold.

Not real money? Perhaps you only need look back upon history to learn that commodity money was the predecessor to and foundation of fiat money.....

The gold standard was dropped in 1973 for political reasons because you can't "print" gold..... hence the economic mess less than 40 years later.

By definition, money is also a store of value, a unit of account and a standard of deferred payment.... I note you conveniently discarded these in your defintion as they don't really support your opinion. Fiat money is not a store of value and is why it is commonly referred to as currency, which is merely a medium of exchange mechanism.

.......

Also, nobody actually buys houses using gold so it seems pointless to chart house prices against gold prices. You might as well chart house prices against the price of iPads, baked beans, or concert tickets. What relevance does it have to the average person?

...

I never knew that iPads, baked beans or concert tickets were a store of value, medium of exchange, unit of account or standard of deferred payment. Your comment lacks any substance and shows a lack of understanding of, or appreciation for, the monetary system & how it functions. Gold is a commodity and held as an asset by central banks, whom I doubt have vaults full of baked beans....

But, my apologies for letting facts derail a great piece of fictional commentary. I look forward to any future entertainment you may be so kind as to share with us all.

 

[HomePage]

C'mon Shadow we both no that Alex Barton is just a persona made up to give the troll forum a legitimate appearance

I thought you were hamming it up that APF is a troll forum but I just checked it out and you're not wrong! It seems like a holding cell for extremist bulls and bears where they just fling mud at each other. They even have a pet cat!

So, no thanks Shadow. I'll stay here where the discussions are (mostly) civil and balanced.

 

[.toe]

Apparently there are two states in the U.S. (& more to come), where you can have a debit card which allows you to spend your gold. Every time you make a transaction it converts your gold to cash instantly.

Is Gold Really Money?
Have you heard of the phrase "not worth a continental"? The continental was issued by the Continental Congress in 1776 to pay for the costs of the American Revolution. Eventually, Congress redeemed them at 1/100th of their original value in bonds, which did not mature until 1811.

Once the continental failed congress reverted to gold & silver money. This is from the Early American currency Wikipedia page

The painful experience of the runaway inflation and collapse of the Continental dollar prompted the delegates to the Constitutional Convention to include the gold and silver clause into the United States Constitution so that the individual states could not issue bills of credit, or "make any Thing but gold and silver Coin a Tender in Payment of Debts."

If all the gold in the held by the U.S. guv were to back all the U.S. currency in circulation today gold would be over $20,000 USD an ounce.

 

[Shadow]

Not real money? Perhaps you only need look back upon history to learn that commodity money was the predecessor to and foundation of fiat money

Yep - that was history. This is the present time.

These days, hardly anywhere accepts gold/silver as a medium of exchange.

 

[Indifference]

Yep - that was history. This is the present time.

These days, hardly anywhere accepts gold/silver as a medium of exchange.

Ahhh, do you even research what is currently happening with the world financial system?

China has already started positioning the Yuan to be an alternate world currency by opening up international trade in the currency (already with Russia, South Africa & Japan) & openly stating a desire to set up the Yuan as an alternate world currency.... and guess what.... there are strong signals that it will be underpinned by Gold.... But the world's second largest & rapidly growing economy must be wrong, right? Because, that was history & we all know that history never repeats itself. Never...

Rather than focus on the present (today), look to the future (5-10 yrs). This is what investors tend to do.... then ask yourself if you think the Keynesian economics of today will still be alive and well in its current form. I seriously doubt it. But if you think it will, please let the IMF, World Bank, EU, Federal Reserve & every Central Banker on the planet in on the secret.... because they are struggling to keep the system functioning & don't know how to fix it.....

The Gold standard was dropped in 1973 for "political" (ie. central banking) reasons. That "experiment" seems to be failing.... unless you relegate the GFC & the subsequent current economic woes to history as well. To simply say, "that was history" & discard the idea of gold once again having a more tangible role in the global financial system is rather naive. In 1970, how many people expected the gold standard to be dropped??? 3 short years later, history was made. Well, perhaps history might be made again, in just a few short years.... unless of course, you know something the rest of planet doesn't & if so, please share.

 

[Aaron Sice]

Yep - that was history. This is the present time.

These days, hardly anywhere accepts gold/silver as a medium of exchange.

great article, shadow. one i have been arguing for, for a long time.

when the IMF underpin international SDRs to gold, you will understand the power of gold as a medium of exchange.

 

[Aaron_C]

Shadow's point is that we don't measure our wealth in how many ounces of gold we have. We measure it in dollars and cents. Of course we could measure it in ounces of gold, but that would require a simple calculation. But for the common layman, gold is not the medium of exchange for everyday life.

 

[hobo-jo]

Shadow's point is that we don't measure our wealth in how many ounces of gold we have. We measure it in dollars and cents. Of course we could measure it in ounces of gold, but that would require a simple calculation. But for the common layman, gold is not the medium of exchange for everyday life.

Do you measure your wealth as a multiple of the average income?

 

[Indifference]

Shadow's point is that we don't measure our wealth in how many ounces of gold we have. We measure it in dollars and cents. Of course we could measure it in ounces of gold, but that would require a simple calculation. But for the common layman, gold is not the medium of exchange for everyday life.

Neither are houses... Oh sorry, my mistake, yes they are. I hear people ask "How many IPs have you got?" all the time.... I just cringe and shake my head. It is not a measure of value. It is like saying that because one person has 3 jobs they earn more than a person with 1 job. It is a ridiculous assumption if there is no contextual base for the comparison.

You are 100% correct that gold is not the medium of exchange for the common layman..... but who wants to be a common layman around here?

By the way, some of us do measure wealth in ounces.... as well as dollars. The first is useful for investment purposes, the second for day to day expenses. If the common layman was prepared to open their mind, perhaps they wouldn't be so common......

 

[Aaron_C]

Do you measure your wealth as a multiple of the average income?

It depends on what my objective is. Anything, whether it be Gold, Currency or what have you, is just relative. The fact that currencies and the gold spot price change every second simply confirms this fact.

However for a society to function there has to be a system of legal tender, of which the dollars and cents suffices thus far. By placing your money in gold you believe that if we revert back to a gold-backed currency this will push up the 'value' of gold because there is insufficient gold to back up the amount of money in the world for the current spot price to support it. I think someone mentioned it has to go to $20,000 per ounce to achieve this.

That's fine - but you are still betting on an increase in value in your dollars and cents at the end of the day. That is, after all, how you determine whether you've actually made a good investment/speculation or a poor one. It's not like you will suddenly have more gold or less gold. It will still be the same amount of gold (but worth more or less in some sort of currency).

 

[.toe]

That's fine - but you are still betting on an increase in value in your dollars and cents at the end of the day. That is, after all, how you determine whether you've actually made a good investment/speculation or a poor one. It's not like you will suddenly have more gold or less gold. It will still be the same amount of gold (but worth more or less in some sort of currency).

I'd put it the other way around Aaron. Gold is real money. The amount of it does not fluctuate like currency, it cannot be manipulated. So when the worlds currencies are manipulated to within an inch of their lives, they lose their value.

We say the sun rises but in truth the earth turns. We say gold goes up in value but in truth our currencies go down, while gold remains steady. Gold is also perfect as money because it's chemically stable, globally recognised & it's not used for a lot else.

I mean what would you say if every time your tenants paid the rent the ink was still wet? I'd say pay me in gold.

Don't get me wrong, fiat currencies are fine, as long as you are manipulating them faster than everyone else.

 

[Aaron Sice]

the gold price (and silver) and its market is one of the most heavily manipulated markets in the world.

because if it weren't, GLD wouldnt have broken 158 while physical traded above 1640/oz.

 

[.toe]

the gold price (and silver) and its market is one of the most heavily manipulated markets in the world.

because if it weren't, GLD wouldnt have broken 158 while physical traded above 1640/oz.

I agree GLD is manipulated. I imagine it's pretty hard to manipulate physical gold once you take delivery, I suppose it could be stolen which won't affect the market price.

My point is that gold itself can't be manipulated, like land they aren't making any more of it.

 

[Aaron Sice]

but while gold is still traded for fiat, its price will remain manipulated.

 

[Intrinsic_Value]

but while gold is still traded for fiat, its price will remain manipulated.

of course it will be manipulated. It will be manipulated because there are millions of participants acting in their own best interest to make a quid out of the transaction.

This is just capitalism at work.

There are far too many 'gold idealists' out there that think that gold should be some form of 'purist investment', that only the 'believers' have the right to transact in gold.

Well gold is just like many other assets, a tradable asset.
One can go long, one can be neutral, one can short, one can enter into some form of derivative combination to achieve ones objective. In ALL CASES the market is being manipulated in one form or another.

On the other hand one can always listed to Mr Wacko himself, no other than Bob Chapman.
Precious metals go up: its because of the falicy of fiat currencies, precious metals go down, its the evil forces of 'manipulation'.

I have no idea where gold/silver will be trading in future years. However i do know, that the 'smart investors' will be attempting to seperate truth from fiction. All these manipulation conspiracy theories just play into the 'suckers land' in my opinion.

 

[.toe]

but while gold is still traded for fiat, its price will remain manipulated.

Agreed, and that is what makes gold valuable, because the value of anything under a fiat currency can be manipulated.

I don't mean to say that gold isn't being manipulated under a fiat currency right now. I mean that money cant be fudged while it's backed by gold.

There are far too many 'gold idealists' out there that think that gold should be some form of 'purist investment', that only the 'believers' have the right to transact in gold.

Well gold is just like many other assets, a tradable asset.

Don't get me wrong IV, I'm not an idealist of any sort, just a pragmatic observer of history.

You seem to be saying that gold is traded for money and open to manipulation like anything else, & I agree. But you are talking about trading gold in fiat currency, that's the reverse of what I'm saying.

When a currency fails, historically you default to something stronger. As South Vietnam failed they defaulted to the U.S. dollar and gold so they could flee the country. The local currency was worthless because everyone knew there'd be nowhere to spend it in a short time.

What do you think will happen if the USD fails (along with a bunch of others), what is stronger than that?

Gold backed money is the most stable system historically, many failed regimes have reverted to it. People may manipulate everything else but they wont manipulate the gold backed money supply. Of course at some point some government will again decide that it's easier to remove gold than to fix some problem, & around we go again.