Subscribe for 12 months with recurring billing - $199

Buy 12 months of subscription time - $199

 

Search Gold Prices
Gold Price
[Most Recent Quotes from www.kitco.com]
Our RSS Feed

Gold Updates by Mail

Enter your email address:

Follow Us on Twitter
« Countdown to Gold’s $1300 Assault | Main | Is Now a Good Time to Buy Gold? »
Monday
Jul262010

How to Buy Your Kids a House

How many Ounces of Gold to Buy a House Casey 27 July 2010.jpg


Jeff Clark, Casey’s Gold & Resource Report


I don’t have a crystal ball, but I’ll bet I can tell you how much a house will cost in five years. 
 
UBS released some interesting research last month on how much gold it takes to buy the average-priced home in the U.S. I put the data to a chart, and it’s quite revealing.



What’s interesting is that as much as house prices have fallen and as much as gold has risen, today’s ratio is still above the historical average. You can see we’re at the same number today as 1970, and yet look where it was 10 years later when gold peaked.



Here’s another interesting observation: the ratio was 100 during both high inflation (1980) and high deflation (1930). The connection between house prices and gold prices during economic extremes seems awfully compelling.

So, if gold peaks and real estate bottoms in about five years, then a house will cost you about 100 ounces of gold in 2015. Maybe it will take ten years, but the point is, I think we can count on the ratio moving lower this decade, and probably significantly so. Even for the modest budget, 100 ounces almost sounds manageable.

Think gold’s too volatile to use as a savings vehicle? Better reconsider that assumption, because we’re convinced a third dynamic will be at work: a falling dollar. Ergo, you can sock away lots of cash for your offspring, but if it’s denominated in dollars, it won’t buy them as much as gold will. Think about it: if gold doubles, that means your dollars will have lost a significant amount of purchasing power.

The fine print here, of course, is that you sell when the gold price is high, and that you pay the tax on the sale. But I would counter that argument by saying that gold is probably not stopping when it doubles from today’s levels.

If we’re right about the direction of real estate – down – and Doug Casey is correct in his projection for the gold price, then I think I’ve got a solid plan to buy my kids a house.
----

And if you want to start on that home savings plan, I arranged for some seriously discounted bullion in the current issue of Casey’s Gold & Resource Report, which you can check out risk-free here...





Stay on your toes and have a good one.

Got a comment then please add it to this article, all opinions are welcome and very much appreciated by both our readership and the team here.

The latest trade from our options team was slightly more sophisticated in that we shorted a PUT as follows:

On Friday 7th May our premium options trading service OPTIONTRADER opened a speculative short term trade on GLD Puts, signalling to short sell the $105 May-10 Puts series at $0.09.

On Tuesday the 11th May we bought back the puts for just $0.05, making a 44.44% profit in just 4 days.



Accumulated Profits from Investing $1000 in each OPTIONTRADE signal 14 May 2010.jpg

Recently our premium options trading service OPTIONTRADER has been putting in a great performance, the last 16 trades with an average gain of 42.73% per trade, in an average of just under 38 days per trade. Click here to sign up or find out more.


Silver-prices.net have been rather fortunate to close both the $15.00 and the $16.00 options trade on Silver Wheaton Corporation, with both returning a little over 100% profit.

To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address. (Winners of the GoldDrivers Stock Picking Competition 2007)

For those readers who are also interested in the silver bull market that is currently unfolding, you may want to subscribe to our Free Silver Prices Newsletter.

For those readers who are also interested in the nuclear power sector you may want to subscribe to our Free Uranium Stocks Newsletter, just click here.

PrintView Printer Friendly Version

EmailEmail Article to Friend

Reader Comments

There are no comments for this journal entry. To create a new comment, use the form below.

PostPost a New Comment

Enter your information below to add a new comment.

My response is on my own website »
Author Email (optional):
Author URL (optional):
Post:
 
Some HTML allowed: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <code> <em> <i> <strike> <strong>