San Diego Housing Bubble News and Analysis

Submitted by stockstradr on October 17, 2008 - 11:59am.

Good news

:-)

You won't have to put up with my posts for ten whole days.

Tonight flying to HK, the later to Beijing, then later Stockholm.

Talk to you all in ten days.

Trip must have gotten cancelled. Either that, or the Great Firewall of China doesn't block piggington.
That's good to know.

:)

I think I'm gonna wait for CVX to go back down below sixty (again)

My indexes (once again) are getting slaughtered.

You guys looking at corp earnings that are coming out? It's not that bad imho....

Good article on Bloomberg today. I must say it's a little educational since I'm not familiar with a lot of the physi

http://www.bloomberg.com/apps/news?pid=2...

Oct. 22 (Bloomberg) -- Gold is for rich guys -- buying physical gold, that is. The metal's highest and best investment use is as insurance policy against a currency collapse. For that purpose, you need a lot of it, stored around the world. Owning 20 or 30 coins is nice but won't protect your standard of living in a world where dollars are dust.

Gold isn't even a reliable hedge against inflation. It reached $850 an ounce in January 1980, a price not seen again until January 2008. During those intervening 28 years, gold plunged and reared but lost more than half of its purchasing power. For a 1980 investor to break even after inflation, gold would have to reach $2,200.

It might, but how long did you plan to wait?

For the average investor, gold boils down to a speculation on higher prices. The latest run-up started in August 2007, when the housing market visibly started falling apart. From $652, it raced up to $1,003 an ounce last March, zig-zagged back to $747 in September, jumped to $905, then slid to $772 as of yesterday.

Hedge funds drove the market but individuals jumped in, too. So far this year, investors have purchased 611,000 newly minted, one-ounce U.S. gold coins, compared with 315,000 in all of 2007.

``We've seen a switch in appetite, with investors moving from futures to physical gold, either owning it directly or going through exchange-traded funds,'' says Suki Cooper, an analyst at London-based Barclays Capital.

Coins purchased strictly for their gold value, not their numismatic value, are known as bullion coins. Many countries mint them -- South Africa (Krugerrand), Canada (Maple Leaf), China (Panda), Austria (Philharmonic) and Australia (Kangaroo), among others. The U.S. Mint makes Buffalos and American Eagles. For investment purposes, you want the one-ounce size.

Supply Shrinks

That is, if you can find them. The yearlong run on bullion has dried up the supply of coins for immediate delivery. Everything was out of stock last week at the online dealer onlygold.com. Kitco.com had Maples at 7 percent more than the spot gold price.

``The premium will likely come down 1 or 2 percent when all coin supplies improve a bit,'' says Jon Nadler, senior analyst for Kitco Metals & Minerals in Montreal.

The various mints project the number of coins they expect to sell each year and produce on demand. Toward the end of each year, they let their inventories run down while gearing up for next year's run. The surge of buyers left them short of high- quality blanks.

Currently, the U.S. Mint is striking only a limited number of 2008 Eagles. The wholesalers are on allocation. No Buffalos are being shipped at all, although a small number might still be minted before the end of the year. By late December, dealers expect to start receiving 2009 coins.

Coin of the Realm

For U.S. investors, American Eagles are the bullion coin of choice. You can put them into individual retirement accounts as long as they remain in their original U.S. Mint capsules. (It's not clear that Buffalos are allowed.)

Eagles also slip through a loophole in the tax reporting law, says Scott Travers, author of ``The Coin Collector's Survival Manual.'' Dealers have to report to the Internal Revenue Service if you sell 25 or more Maples or Krugerrands. They're not required to report your sales of American Eagles and some other coins, although some may do so. (Kitco, in Canada, says it does no tax reporting at all.)

Normally, one-ounce Eagles sell for 5.5 percent to 7.5 percent over the gold price, Nadler says. Small dealers might mark up the price even more.

In this buying panic, I saw online dealers charging as much as 13 percent more than spot gold. Their Web sites warned that there might be a wait before your Eagles could be shipped.

Fool's Gold

On EBay and the Home Shopping Network, coins sell at fantasy prices. A set of Eagles in four different weights was offered on HSN at $4,999.99. In gold, it's worth about $1,450. Prices like these take advantage of neophytes. A coin dealer might sell a four-coin set for $1,850, Travers says.

A cheaper way of buying gold is through an exchange traded fund. The most widely traded fund, SPDR Gold Shares, costs 0.4 percent a year in fees, plus your brokerage commission. You don't own the gold directly. A trust holds large gold bars (warehoused principally in London) and sells shares against them, which are traded on the open market. You can't redeem in gold itself.

It costs even less to buy bullion in a pool account, such as the ones offered by Kitco. Like an ETF, a pool account sells shares in a large bar of warehoused gold. You pay just a hair over the spot gold price, and sell it back to Kitco for just a hair under. There are no annual expenses. For a fee, you can redeem in gold itself. As with ETFs, you depend on the pool's trustee to support its guarantee.

Gold, by the way, is taxed as a collectible -- whether you buy it in the form of coins, ETF shares or an interest in a pool account. Your tax rate on long-term capital gains would be 28 percent, compared with 15 percent on other assets. Only a significant price gain (or currency collapse) redeems your bet.

(Jane Bryant Quinn, a leading personal finance writer and author of ``Smart and Simple Financial Strategies for Busy People,'' is a Bloomberg News columnist. She is a director of Bloomberg LP, parent of Bloomberg News. The opinions expressed are her own.)

To contact the writer of this column: Jane Bryant Quinn in New York

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Oil is a tricky topic because instincts telling me (GUESSING here) that while oil will get a pop from the OPEC production cut, additional demand destruction will pull prices down further, probably even below $60/bbl during this economic recession/depression. However, I'm not willing to put off oil stock purchases hoping for that price level.

$60 dollar oil means civl unrest in many of the petrostates. They will respond. Say hello to economic warfare.

Touched 720 today. Platinum is at 843. Most of it is strengthening dollar.

This dollar rally is amazing and inexplicable to me.

I was thinking about getting into gold at this point, but now it's starting to look like a sustained bear market rather than a blip. And there's no end in sight for this bear market. Oil companies, maybe. Gold ... too afraid.

No. Persian gulf countries will be fine. Canada will be fine (guess where we import most of our oil!) Nigeria and Russia will be shaken up, but they can't really do anything.

http://themessthatgreenspanmade.blogspot...

"Every decade or 15 years or so, the Saudis drop the price of oil to where the economic impact wipes out most of the projects in the world that could lead to an alternative for oil. Then, after the projects get canceled, the Saudis let the oil price drift back up."

On one hand, $60 oil certainly does cut into Saudi profits. On the other hand, they were quite happy with $20 and $30 oil during the 90's. They save more in the long run by making sure that Volt and plug-in Prius and the likes are dead.

By that logic, oil prices should stay low for 2-3 years. In the mean time, Toyota will bring its plug-in Prius to the market and fail to attract buyers, Volt will fail too (unless GM goes bankrupt first).

No. Persian gulf countries will be fine. Canada will be fine (guess where we import most of our oil!) Nigeria and Russia will be shaken up, but they can't really do anything.
http://themessthatgreenspanmade.blogspot...
"Every decade or 15 years or so, the Saudis drop the price of oil to where the economic impact wipes out most of the projects in the world that could lead to an alternative for oil. Then, after the projects get canceled, the Saudis let the oil price drift back up."

Ok, your wrong all over the board.

Saudi Arabia is probably they only one that won't be affected. Russia, Iran, Venezuela, and others of the will get hurt. Though they all do have differing pain points. Russia and Iran are hurting now and we have been aggressive to them lately so they might have a vested interest in keeping prices up at all costs. Possibly at all costs.

On the non-opec side: Canada will get punished because the majority of their oil comes from oil sands. There are various thresholds of profitability and 65 is one of them. How it breaks down percentage wise per differing fields I have no clue. All oil is not created equal no matter what economists spreadsheets say. Also, I would imagine that mexico would be a silent cheerleader of a major cut. They have been in financial dire straights since cantarell stated crashing a few years back and I'm sure the price drop has been no picnic.

Finally, the reason the price of oil is dropping in not because SA has flooded the market. It's because the global economy blew up. SA is now working in the interest of the west and not their best interest to block production cuts. Back in the 80s the last time SA flooded the market was an arrangement the Reagan adminstartion and them so they could bk Russia. Heck, Alt energy projects were considered communist back in the Reagan era I think.

Oil sands are not *that* expensive to develop. Existing operations can pump out oil with less than $10/barrel all-inclusive costs. 65 threshold applies to oil shales, those are completely different from oil sands and I don't believe they are even being exploited to any degree in Canada.

Putting economics aside, oil sands are horrible from a CO2 output perspective. Takes a lot of energy to extract the oil from the mud. Canada likes to think of themselves as more green/environmental than the USA, but the oil sands throw that out the window.

WHOOPS, sorry.

Did i recommend gold at $760, only to see it immediately drop down to $700!

Sorry. I can make mistakes.

Well, I'm buying more gold today. Got it at about $720. Happy with that price.

Oh, also my +20% net on my oil stocks position has now turned down and I'm in the red. Ouch!

Oh well, at least the oil stocks are moving up so far in today's trading.

Roubini stated in his CNBC interview that comodities (Gold included) will drop by another 20% (short term). I would stay in cash until that time.....

I'm not sure about gold in a deflationary/deleveraging environment where the jewelry market has collapsed by all reports.