[Wiley]

I’m not too worried about jewelry demand as a fundamental driver of gold. I think investment demand, demand from China/India as they come on line, and the demand from the massive amounts of liquidity being injected by central banks all over the world of 5-8% yoy (including china).

I also like the water stocks. These companies are buying up the water infrastructure of these housing communities essentially becoming utillity companies. SJW is my favorite.

[Wiley]

ljr,

Wanted to make a few comments in rebuttal to your remarks…

1. small market-Considering that the U.S. money supply has doubled during W. Bush’s tenure, the fact it is a small market makes it even more compelling. What I’m saying is if you take the amount of money that was put into existence in this country since George Washington, that amount has been doubled in the last 10 years. Truly amazing. All those dollars cannot be drained and are always seeking best risk/return. This does not even speak to the Japan/US carry trade that also injected unprecidented amounts of liquidity.

2. Money is faith-Agree completely. A 1950 dollar is worth less then .12 cents now. See #1 and understand when its a good time not to have faith in the paper money. Gold has been money for 5000 years. Our current $ has existed for about 35 years and doesn’t have a great track record for that short period.

3. Recessionary affects-My argument would be we may get more then a recession (gold positive last time), a dollar collapse (given the amount of debt, current account deficit, and inability to fix this in a declining market), above mentioned inflation, and recources being used up with mine production sidelined for 20 years causing delay in more production coming online to fulfill investment demand.

4. Hedge funds- completely agree. But if something is in a bull market all the manipulation in the world is not going to stop the primary trend from completing.

5. Golds behavior-has been and always will maintain value. Unfortunately there isn’t a paper money in history that has ever survived. Paper money is political, gold is not. Paper money is created out of debt, god is not. If paper money is so great why do the banks keep tons of it? Doesn’t make any sense.

6. ETF’s-with the amount of corruption being announced almost daily in the financial world why trust them with your only real insurance against instability. The London Metal Exchange defaulted on their nickel contract just the other day.

Defaulted debt does not have the affect of reducing dollars in circulation. That is an old wives tale. Where did the money go that was lent?

Apparently some people do have faith in gold. It has outperformed the dow the last six years.

My feelings are basically that paper assets have been in a bull market the last 20 years. Commodities a bear mkt the last 20. That is reversing as we speak. Don’t believe me look at the trend of the US dollar index and a gold chart.

Obviously to each his own but you said you’ve thoroughly researched gold which I find interesting that your not a believer in this climate. Have you ever read ‘Creature of Jekyll Island” ?

[Wiley]

Contraman,

I respect your post but am a little curious…

I’m guessing you feel housing is overvalued??? If true how can you sell anything at all right now? How can you make a living.

Now taking the other side of the coin don’t you think if someone is in the market to buy they are going to with or without your advise. At least if you are their realtor then you can treat them fairly even if YOU feel the market is overvalued.

Just because you and I and most others here feel it is a bubble doesn’t make it so. I’ve been wrong about it for several years now so anyone taking my advice would have missed out on some nice gains.

Is it the responsibility of the realtor to be an expert in macroeconomics. How much responsibility lies with the buyers.

Not trying to be argumentative just playing devils advocate.

[Wiley]

Performing a Coup on founder John Creen was the start. In the late 90’s they panicked when chb began buying up some of their retailers. They went on a buying spree also where both overpaid for retailers during a time when there was four years of inventor on the ground. They basically took a debt free company and levaraged every asset as the industry imploded.

For a while the RV side was keeping them ok but I think the price of gas and product factors are really killing them now. Really sad as it was an extremely well run company.

There are only two national lenders right now and some regional banks, credit unions, etc. The lending standards are so tough on the chattel side (w/o foundaition) that it is easier for our customers to get a real estate loan with twice the payment.

I guess yes it could pick up since now is the time they should be lending (as far as being able to pick the cream of the crop in customers) but I’m very doom and gloom on the economy as a whole that I’m very biased against it.

[Wiley]

Anxvariety, really it is a huge industry. Fleetwood is a (former) Fortune 500 company and Mhomes do represent approx 25% of single family homes in the US. Yes we do service the lower end of the market, but isn’t the big money usually made on the lower end of goods?

My real hobby is investing and learning economics but I think there are a lot of brighter minds on this board then I. Thanks for the compliment though.

[Wiley]

Yes many of todays Mhomes are being sited on foundations. That is because they can then access the mortgage back security side of finance (which fanny will purchase). And just for fyi todays Mhomes are built to HUD standards and can be legally sited anywhere a stick built house can be sited (with very few exceptions, one being cc&r’s.

Yes it is a cyclical industry coming up to it’s 7 year bear market end. The problem as I see it is the fallout from the housing market cleansing that is surely to affect us all in ways we probably can’t forsee right now. Also for the record I’m of the opinion that these cycles are created (or perhaps caused to be more pronounced) due to our system of money creation (banking system). Money is created which goes looking for yield. This creates imbalances (bubbles) which are then realized to be overvalued and a cleansing then ensues.

Regarding the question about abs and mbs I would say your exactly right. In the past the bank would approve your loan knowing it was going to hold it to maturity. As such they were fairly prudent about their loans. Some smart Wall St. guys decided to purchase all these loans, package them together and sell them off in little pieces. People (investors) assumed there was less risk since they’re only purchasing small pieces. Money then flowed in. At some point everyone realizes the risk is the same and even greater since the lending criteria was relaxed due to high demand. Money flows out.

By the way I’ve been to a few housing blogs and this one is by best in quality of posts. Actually its the first blog I’ve ever posted something on.

[Wiley]

I’m a retailer of manufactured homes here in So. Cal. I was also a principle in a company that we sold to chb years ago. In my opinion these stock are only good for a trade right now but not an investment.

This industry goes when they turn on the money and shut off when the financing dries up. There is nothing elso to consider fundamentally as to when they’ll do well. The last bull market in this industry was when abs (asset backed financing) really took hold and openend the faucets. In ’99 the industry shipped roughly 360,000 units. In 2000 they turned off the money. Last year I think we shipped 130,000 units, during the greatest bull market in housing. A lot of carnage.

Fyi, I see exactly the same thing happening in RE right now. Too much money chasing yields here creating overcapacity, fraudulent lending, and too lax lending criteria. I have no doubt the same cleansing is ahead for real estate.

Regarding Buffett’s forey into the industry…I have to admit I was puzzled. I’m a big fan of his and have read his biography’s. He’s made some mistakes in the past and as humbly as I can, I’d say this is one also. I think he purchased Oakwood out of BK not realizing how fruadulent their portfolio was. I believe he then bought Clayton to help handle the the giant Oakwood mess. I could be wrong though.

Fleetwood, formerly the cadillac of the industry is now so leveraged many believe it won’t survive. CHB just bought a modular company in England so what their thinking is behond me. Not too familiar with CAV.

Well I just thought I’d offer my perspective since it is a weird industry to try to understand. As for comparisons I think you’d be better to compare it to GM or F. Same type of finance driven, both are manufacturers, etc.

[Author]

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