Re: Marc Faber Buy Buy Buy GOLD before the dollar collapses

[HudsonKnowsEconomics]

@MrAlanKendall, what you're not taking into account is that we have 3 times more sq ft per person than in 1970. People can get far more cozy. For example, kids are staying at home like they do in other countries with high unemployment...until they're 35. This will keep rents really low, but the CPI will double when commodities triple. Services, wages, and housing can stay flat, but we can still have strong inflation from commodities.

[tigranvartanovitch]

Yes, in the simplest models, gold will only maintain your wealth. So what do we do until 2015 while the governments are printing money? Let the banknotes stack up? You don't seem to understand inflation, monsieur. The money loses its value. You therefore have to protect your wealth, by getting your wealth out of fiat currency.

[MrAlanKendall]

@tigranvartanovitch

I do not deny that owning Gold is good. I am just saying that the dollar has already made a massive drop. This favors Gold. I own Gold.

[tatomuck18]

The dollar is not collapsing. Its just that other dirt poor countries are moving up and getting better.

[kellerj0]

@tatomuck18 what makes you say this? Any evidence?

[MrAlanKendall]

@kellerj0

The $USD indicator can be plotted on stockcharts and shows the value of the US dollar against a basket of foreign currencies. Under Reagan it shot up to 160 (60% above value). Under Clinton it Shot up to 140 (40% above value). Currently it is at 79.10 (-20.9%) so the US dollar is trading below half of its peak under Reagan. In the 1970's when unemployment shot up and rates got up to 21% the $USD fell to 70 (-30%). $USD is low because the US Govt releases 4.1 Billion per day.

[angeloskouk]

ok first of all hyperinflation DOES NOT come from demand. and if you buy gold and there is hyperinflation, house prices in nominal terms go up but in real terms go down. example:

Gold $1,000------House $200,000 . this house is worth 200 gold coins... next example with inflation...

Gold $10,000-------House $400,000

the price of the home doubled but is now worth only 40 gold coins instead of 200 gold coins.thats what happens in hyperinflation. please educate yourself before posting nonsense

[MrAlanKendall]

@angeloskouk

Exactly, If I have $20,000 in gold now and I hold, I'll have $200,000 in gold later.

But, If I buy a $500,000 home with an FHA loan and it will go to 2 million then I have turned my $20,000 into 1.5 million and I am paying less than rent for my own home. If I am really smart, I leverage the equity when the property goes to $600,000 and buy a rental. Later I sell the rental and pay the taxes, pay off the home and still have $500,000 left over to buy gold.

[labrath1]

Im pretty sure all those buying gold will pay me what I want for a can of beans....you cant eat gold.....buy food...greater buying power..or else save shells...wompom will be the next buck....hurry sheeple buy gold....I will need it when your as is starving..HA HA HA...Ipray for the absolute colllapse

[Luvanicebum]

You can only store food for so long dude.

What makes you think I can't liquidate my Gold to rich foreigners that can afford it and love it? So, truth is, when gold hits $4000.00/oz, my one once of gold will buy 1000 cans of beans. When 100 ounces of gold becomes half a million bucks on the world market, I'm going to live like a wealthy tourist in my own country, buying a $20 can of beans like it was a dime.

[maximusTLP]

@labrath1 I don't think you understand what buying gold or silver even means. lol. what good is a few cans of food going to do you when you can only buy small amounts right now, it is not like you can buy 10 years supply worth of canned tuna lol. you invest in gold, the price explodes, and you use that to buy land for agriculture duhh.

[golfprobro4eagles]

good vid

[golfprobro4eagles]

You have a ocean of money all the gold in the world will fit into a swimming pool. When the world decides it needs a hedge you can see gold will have a bubble. If you own gold before the bubble you may get rich. This is not the same as divergence but another way gold will act like a commodity and other times it will act like money.

[golfprobro4eagles]

You have a ocean of money all the gold in the world will fit into a swimming pool. When the world decides it needs a hedge you can see gold will have a bubble. If you own gold before the bubble you may get rich. This is not the same as divergence but another way gold will act like a commodity and other times it will act like money.

[donniebrasco24]

no dude you'll know when it collapses. you better go buy a safe and a gun

[dojufitz]

In a chaotic hyperinflation - there will be too many drastic changes - what tax will you have to pay?

the rates will go crazy?

fixed rent will kill you....

will anyone rent your property?

Alot of people will have no money - hyper destroys wealth - my money is in gold and silver.

[ChrisGilliam2]

So you really think the hyperinflation is so far off? I hope you are correct, my gold and silver stack is still too small - but growing. No matter what happens there is almost no chance that you will lose much value in precious metals so it's the best place to put $ right now.

[salahuddin786]

What they mean is that the $ will no longer be a WORLD RESERVE CURRENCY - this is the collapse of a Major Currency of the World. Faber means that. Hyper Inflation will follow.

Patience is what you need to know about.

You will see it in the next few years or months in the tens

[outwardbounder]

The list of pros and cons are by far in golds favor.

[outwardbounder]

Alan,

There are many drawbacks to your plan.

You don't own the home until you've paid for it in full, where the gold purchase has no counterparty risk. What do you do if the bank asks you for full payment or the keys ? What have you left after that? What happens if you cannot pay the property tax if the Govt hikes them by a few hundred % to pay for all the US's binge spending ?

[MrAlanKendall]

After 3 decades of invesing in Real Estate, I know that what you are saying is all true about the risks involved in owning Real Estate. What I do to get around the big dips in Real Estate is to watch Foreclosues; as long as Banks own Foreclosures, Real Estate is either falling or flat. I then buy when foreclosures dry up, only then can I take advantage of run-ups with leverage.

[outwardbounder]

I understand this well. This does not however address the abnormal situation we find ourselves in today. It offers no hedge against government decisions that can adversely affect your game plan... of which there are many. I can think of no mechanism (other than to have significant unencumbered cash set aside) that can protect you from this. For me, the risk therefore out-ways the reward due to the significant unknowns.

[chroNick546]

"Buy $25,000 of Gold and hyperinflation makes it jump to $250,000. The problem will be that all things will go up 10 times in price so you have not gained anything."

This is wrong. That would mean to say, since gold went from $250 to roughly $1000, we experienced 4X inflation. In 1971 to 1980, gold went from $35 to $850, but prices on normal goods didn't go up 24X. Gold will move up faster than other prices.

[MrAlanKendall]

Gold was oversold because in 82 it was $860/oz and in 2001 it had fallen to $250/oz. This was because during the 80's and 90's, as the Governement lowed interest rates, Business took out cheaper interest loans and expanded. This caused a 20 year rotation out of commodities and into stocks.

[chroNick546]

Actually it was overbought in the early 80s, not over sold. And not only that, but it will once again be overbought because people will have to protect their purchasing power, and they will flee to gold as it is the easiest asset which is indexed for inflation to acquire. Gold is still undervalued considering that the american government has printed 8 times more money than in the 80s

[MrAlanKendall]

I do not deny that Gold will go up, in fact, I believe that Gold will rise to 8,500 per oz next decade. After thinking about it, I believe that I can make more money with leverage in Real Estate. The problem is that I have to wait till Real Estate quits falling, and during that time Gold is by far a much better investment. I also believe that GLD will outperform the stock market over the next 10 years.

[orangefield1]

real estate problem: government taxation on land as said by jim rogers and peter schiff

keep gold overseas, leave the country

[MrAlanKendall]

Buy $25,000 of Gold and hyperinflation makes it jump to $250,000. The problem will be that all things will go up 10 times in price so you have not gained anything. A better plan would be to buy a $300,000 dollar residential property in 2015 with the $25,000 (FHA loans are 3% down) and when it goes to $3,000,000 you will have 2.7 million dollars of equity. When the property goes to $400,000 refinance and buy another property and you will make 5 million dollars when they both go to $3,000,000.

[me98321]

1. Your intention is to make profit out of the hyerinflation, while most listeners here are interested in protecting their savings

2. You are forgetting the force majeure clause in any loan.... The financial institutions may be dumb when dealing with other people's money... But they are shrewd when it comes to their own money... Under hyperinflation they can charge variable interest rates which will protect the loans they have given out.... You underestimate whose side the govt is...

[MrAlanKendall]

I have contacted both Banks that I owe the money on, and I have carefully read the loan documents and my residential loan has a maximum rate of 9.95% and my comercial loan has a maximum rate of 12.5%. Hyperinflation would devaluate what I owe.

[me98321]

But your are missing the fact govts both Dems or Reps don't care about the small guys and will do everything in their power to rescue the big guys.... Search for Don Harrold on youtube and watch his video titled "Too Small to Succeed" which has more details as to why your plan will not succeed...

[maximusTLP]

@MrAlanKendall in 1971 average house was 20,000 and silver was about 1.39 an oz. by 1980 the average property was worth 42,000 and silver sky rocketed to 52 an oz. if you would have bought 20,000 dollars worth of silver in 1971 your investment would have been worth 770,000 dollars in 1980. I think that you are incorrect, yea the price of the house might go up, but the value will go down. in the example i just showed you real estate went up 100 percent, silver went up over 4000 percent.

[eatandtravel]

@me98321

What? If there is hyperinflation, they can turn your fix loan into a variable. Where did you get that?

[budb11]

....buy a $300K property in the middle of the next decade.....? What was the rest? Seems like you got cut off.

[MrAlanKendall]

Buy $25,000 of Gold and hyperinflation makes it jump to $250,000. The problem will be that all things will go up 10 times in price so you have not gained anything. A better plan would be to buy a $300,000 dollar residential property in 2015 with the $25,000 (FHA loans are 3% down) and when it goes to $3,000,000 you will have 2.7 million dollars of equity. When the property goes to $400,000 refinance and buy another property and you will make 5 million dollars when they both go to $3,000,000.

[budb11]

Thanks