Gold Is Screaming: Are You Listening?

Finance U Public Finance U
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My two cents FWIW:

Real estate is highly local. Some markets like FL, Austin, Boise are down already. Some are volatile and likely to move. Some that did not shoot up during COVID have less downside risk.

Other markets went up during COVID but the economics are still solid with domestic migration, healthy local economy, and job openings mean the fundamentals for a deep price cut just aren’t there.

It’s always a risk to buy but time is your hedge: the longer you plan to stay - or can stay - the more likely the home appreciates and you come out ahead vs renting.

In some areas, rental units exploded over the last decade with illegal immigrants. If they deport, demand will drop while supply is fixed, leading to drops in rent. That may mean high vacancy rates but it also may mean people step down into more affordable housing: houses to luxury apartment; lux apt to B-class; B-class to C-class; and multigenerational living becomes more common.

There are other wrinkles to do with the Great Reset and CBDCs and 15-minute cities. Frankly a lot of that is without clear or exact precedent so it’s hard to say. For instance, is taking out a 30-year mortgage a bigger risk if the Great Reset leads to the mortgage holder seizing your house even if your payments, taxes, and insurance are up to date?

In the end life is risk… and owning a home is a lifestyle choice.

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I’m going to switch my usual answer, which has always been it’s better to get started on your homestead as early as possible.

While the time-truths contained within that advice remain as indisputable as ever, what I cannot account for any longer is which locations will be the best to hunker down for the long-haul.

The level of crazy is nearly impossible to predict at this point. Some areas are going to surprise to the upside, and many more to the downside.

For example, Texas being the first state to go in on a Digital ID? Not on my bingo card. I know, I know, “it’s just a toe dipped in the pool” but it also is what it is.

So the first part of my answer is simply that you cannot predict where you might end up relocating to…none of us can.

The second part is easier…from a money/timing perspective renting is vastly preferable to buying right now, at least nationally.

To answer your question more specifically, I’d need to know where you are considering.

California? EffNo. Not now. Wait. Be patient.

Ohio? Well, hang on, there are some really good deals in Cincinnati and Akron right now…

But, all things considered, I’d say ‘hang tight’ and wait for the Trump recession to really kick in. Better deals await.

But…and there’s always a “but,” … start patrolling the properties you’d like to buy as if you were going to maybe buy them tonight. Make lists, note the features and price points. Know what you want and what you’d be willing to pay, and what you’d be thrilled to pay.

When these busts come (and they always do), the hardest thing to do is “pull the trigger” when everything seems to be swirling the bowl.

So having a very clear buy list, and pre-set price points, is extremely helpful for providing clarity of mind.

Example: I have been searching for an excavator for 6 months. I scour Facebook Marketplace 2x per week. I know the price points of each specific model vs lineage vs hours on the machine. I’ve made inquiries and probed. I now know the excavator market within the 100-mile boundary I’ve set. I can price these things within a couple of thousand dollars without even seeing the asking price based on observable characteristics.

You should do the same for the properties you want. And be prepared to be patient. Your time is coming.

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Hey Chris -

Sorry I should have mentioned where we’re at in the country. We are looking in the Springfield, MO-metro area. Not sure if that changes your advice or not? Thank you for your previous response!

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Cost Vs. Value. It has been a dead asset for me for a VERY LONG time.
I kept buying it up to 2,500/oz. I have not bought it since then. I have plenty.

But you should avoid trading physical gold, it’s a losing proposition.
You buy it with the HOPES you NEVER NEED to sell it. And if you do, it’s worth it to let it go. Don’t trade real assets.

If you trade Gold (I had to explain this to my wife, because she keeps reminding me, “your gains are only on paper”), what do I buy if I sell it.
Also, I pay a PREMIUM to buy it, and a premium to sell it. At one point, the premium was easily $90/oz. Now if you realize you have to overcome $180/oz to break even, you think HARD about selling.

Again, I am NOT TRADING gold. If you need to trade it, use GLD / SLV and play in the legal casinos, the VIG is much lower. you can buy 1 share and pay pennies.

You have to ask yourself. WHERE is GOLD going? Or, how much can they debase the dollar? Holding real assets (and DEBTS) while the dollar is debased is the best position, I am discouraging my daughter from paying down her house any faster.

Assume she has a 4% mortgage with $100K left to pay it off.
Assume she has to keep the insurance on the house.

If she found $100K would you tell her to:
A) Pay off her mortgage
B) Buy BTC
C) Buy GLD (in the stock market)
D) Buy Gold (Physical)

An argument can be made for each decision. And your answer tells you about YOUR values. A risk averse person would choose A and clock the savings. Maybe DCA into physical gold with the money that used to go to the mortgage (if they are disciplined).

Next, assuming over the next 18 months, GOLD Doubles in value.
How would you feel for each choice?

Finally, assuming Gold went down, or didn’t move in 18 months…
What would you do then?

Personally, the 4% lost in the “Gold went down” camp would bother some people. But you were risking 4% to potentially make 100%. It’s all probabilities. In my book, you are crazy to scavenge 4% in the face of a potential 100% move.

Enjoy!

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now imagine if you had spent that money on bitcoin… I almost got involved with BC when it started. I thought it too much like pet rocks or beanie babies. One of my many investment regrets

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Oh, I started buying BTC at $5K. Last Purchase was $25K. It has outperformed Gold and Silver by a long mile.
Most of my peers had bought, and SOLD for a NICE profit. I’m kind of stupid, I don’t like to sell. (I sold a bunch of ETH for $200 and $500, I don’t have any more… It is $4,000… Purely missed opportunity). I have LTC but it isn’t going anywhere. I have a spattering of stuff. They are lottery tickets. Designed to let me cash them out and buy a toy, or a piece of farm equipment for my buddy’s 65 Acre homestead.

BTW, Meckler and Cardone just did a podcast where Cardone said “I think of BTC as owning stock in a business venture…” His argument is that if you treat it like a business investment, where you don’t sell. You wait 5-10yrs to consider if you are going to sell… (Just like if you built a company from scratch). But without the effort and headaches.

Final point. BTC is currently $2T… It is going to $200T based simply on the fact that only 2% have any. And it will grow to consume EVERYTHING. It will surpass gold. And as NATIONS start buying, and the wealthy allocate 2-5% of their portfolio, it has plenty of room to grow.

His comment was: Why would I build another business. I get tons of offers, I start with 1 question: “Will it out pace BTC?” If not, why would I do it?

Retirement money is look hard at STRK and STRF from Strategy/Saylor.

Don’t buy more than you can afford. And if you can hold it for a minimum of 5 years, you are likely going to be fine. Saylor is still buying the Highs, and hopes to for at least 10 more years.

I also own BIT, STRK and STRF in my IRA.
I recently started playing with WPAY and XDTE. They are paying WEEKLY dividends. They are new. We expect about 12-18 months of performance out of them. But check out the % returns. Take the dividends and invest in SGOV or something crazy safe.

My buddy is aggressive, He owns 1,000 shares of XDTE. When he gets his $ 180/wk dividend, he buys WPAY. When he gets his WPAY dividend, he buys SGOV (3-4% govt bonds).

It’s a crazy market. Everything can go to crap at any time.
Good Luck. Find something that works for you!

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Great questions. Obviously depends on the person, age, health, risk vs safety position, job security, economic viability of the geographical location, fixed vs variable interest rate, and such. I am not giving advice, only my opinion here and my track record leaves much to be desired.

I would not be a fan of C. buying GLD. Does GLD have the physical to back up the investment or is it mostly paper gold leases and options?
If they don’t have the physical, and charge us a fee for storing it, then they do not have it. There are fund(s) that emphasize physical backup.

I Used to be a huge fan of paying off debt early, especially prepaying in the first 10 years or so of a 30 year mortgage to shorten the back end of the loan payments, and that has served us well. Today, in this environment I’m not so sure. If it was a small debt that I could pay off totally and get peace of mind and avoided interest then that is one answer. If it is $100,000 that will take 15 years to pay off, (hoping my health, job, and the economy hold together for 15 years), then that is another answer. Maybe a bit of PM physical now or BTC would pay off the 100K debt in the future due to fiat debasement like in pre WW2 Germany.

BTC & physicals & reliance related appear to be the winners from where we are currently at, as fiat debasement appears to be highly likely and could accelerate mightly.

Personally, the chance to talk to the Chris/Kiker team would be my first choice.

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Obviously.
FWIW, I wrote PreQualification Software right out of University.
When I saw the amortization schedule, I added a “Paydown” feature everyone loved. I used the heck out of that. I paid my first 30yr mortgage off in 11yrs. Very proud of that. The second one I paid off in under 8.

But now. No way would I pay down debt when I could purchase any number of better investments. BTC being the top of the list.

The 4% is a fixed rate. Anyone doing a Variable Rate in the last 10yrs is clinically insane IMNSHO. (Back in the 1980s, CA was borrowing this way, and with PAYMENT increase caps, but little to now Interest rate cap. Causing loans to negatively amortize… Ughh).

Thanks for the answer… It’s a good question…

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One Canadian lender offers a double up option. You can pay double your monthly payment Iindependantly each month, does not increase your monthly requirement) and it comes right off the principal. If needed in the future you can skip a payment for each one you doubled up. To my eyes, it acted like a savings account.

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You really have to be careful about SOME such plans.
Having written the software to analyze this 30+ years ago…

Some companies do this, but count the payment as the ACTUAL Payment, just paid early, and they DON’T reduce the principal on the PAYMENT RCVD data, but on the PAYMENT DUE date (which has the effect of NOT decreasing your interest paid). [You honestly cannot hate bankers ENOUGH]

I always just applied extra to the principal on every payment.
The trick I used, was in December, I would calculate how much Principal I paid in that year. Then I would try to add THAT MUCH as an additional Payment. 2-3 times, I spent my entire Xmas bonus on wiping down principal.

Finally, if things were getting dicey at work, I would also try to make 1 additional payment. And then just pay everything 1 month ahead of schedule. IT WAS in reviewing this that I learned that additional principal was not counted as early. AND that’s when I looked for it with some of the other offerings… (in the banks defense, this does make your mortgage calculation a bit harder!)

Honestly, I love this community B/C of so many like minded people.

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wow, that is criminal. In my case I got a monthly statement indicating that the principle was indeed reduced.

It was a decidely weirdly flexible product. I was basically approved for loans up to X $. Under that umbrella I could have up to 5 segments of different structures. This was back in the days when the CC companies were offering 6-12 month balance transfers loans at 0% with no transfer fee. I would take out the max, pay down the floating portion of one of the segments and at 5.5 months pay off the credit card from the floating segment. That went on for about 5 years.

I was gleefull to take advantage of their rules. The loan manager was amazed.

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Ouch! That is just banker theft.
I was lucky enough to find/buy a used book at an estate sale maybe 45 years ago called “The Banker’s Secret” from which I learned much.

I discovered that a loan from our credit union was simple interest, and from a banker was compounded interest.

Learned that our monthly mortgage payment consisted of a months past interest due and the reminder was forward principle paid.

Learned with every mortgage, to make them print out an amoritization schedule month by month for all 30 years x 12 months, all 360 payments.

Each monthly payment showed how much was interest, and how much was paying down principle.
“Forward principal, and backwards interest”

That made it easy to figure out how much extra to pay that current month, to prepay the principle $ charge for the next month, which shortened the whole schedule by thus shortening the overall length of payments due at the end by that one payment. It made it easy, to visualize how extra effort on the first year of payments could turn a 30 year repayment into a 29 year repayment by prepaying a few hundred dollars.

I wasn’t as clever as CaptainKirkFan to write code to make the computer do it, but still got the effect done.

I also learned about the nasty tricks creditors used back then to circumvent this on auto loans. They had some legalize trash contractual stuff that made you prepay most of the interest in the first half of the loan, and mostly principal in the last half. This left many upside down owing much more principle still left on the car as the car got older. It was legal thievery in my opinion but it was done and I fell for it back then. Hope that is no longer legal to do.

Owe well,
good job CaptainKirkFan!

(edited for clarification)

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Exactly. I graduated in 1985. I had a paper route years early. My favorite customer (the kind whose wife invited you to come in (MI winters), and gave you a hot cocoa because I had to be freezing. He drove a TransAm, and “Owned” the gym around the corner (A big Complex). Until interest rates rocketed up. He told me “Never EVER do a ARM, always fixed interest”. In a handful of heartfelt sentences, he explained how he just lost EVERYTHING. The business, the car, the house…

I like to ask people. In a 30 year mortgage, without paying extra. What year is your house 1/2 paid off? They all guess 15/16 years. From memory, I think it is like 22-25 yrs.

Actually, the reason I paid off the 2nd home in under 8 years was. I took the last BIG chunk, and used a HELOC to pay the check when I realized the HELOC was Simple interest. I paid that off in about a year. LOL.

Be Well!

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I’m saying average people got priced out quickly for a reason. It’s great if you’re early but most aren’t. Congrats on your investment.

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I’m not clever enough to write the code either so I just cheat and use an online amortization chart calculator like this one.

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Sorry, I don’t think of most of the people here in this group as average.
Have you read Chris’s book? What are your strongest types of wealth?

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Your examples are prime example why even best school training of these matters isnt enough. I noticed long time ago things in real world, when I have bank account and pay those things, that these things dont add up. That’s neutral take. Then there is fomo hype via marketing and general money printing when I as citizen am positive biased to not even be so careful and feet on ground, when they can sell even more shady stuff and I have wrong impression and dont bother to read anything as things overall is day to day euforia.

If someone is either bigger business owner (bigger than your microcompany solo business) or other decisive position (manager may not qualify or matter in hierarchy) these even smallest details can be important, for the very least they compound on each other and thus form big whole (eg rent a bit too expensive space for your needs, didnt look so carefully for 10 company vans contract as it was “friend” you met in sports match and so on).
At least problem for me is I do that when Im signing or buying something but then it is 10x harder to do later, so if it wasnt done carefully in the beginning, it is taken as granted. Majority of people have this adaptation over time.

Then again Ive learned maths alone and “most rationale way” doesnt always cut it for those reasons, I have to do best fit for my personality and taking time into account how I tend to behave.

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Tofu dreg is not just for breakfast anymore.

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I guess you misunderstood me.

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Let’s say industrial civilization fails and I have gold, and spend it to purchase goods and services after the collapse-- everyone in my vicinity will soon know that I have gold, and since the rule of law no longer discourages people from killing me and taking it (since sooner or later I’ll run out of ammo), what good will the gold do me?

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