Hello Skol sorry about the late reply I am extremely busy here at this time - all very exciting IMO.
Congratulations on your real estate that sounds like you hit a winner 15 years ago and had done that before as well - fantastic well done. You also state:
"You buy property right you can make a killing, I've done it a few times, with gold, you put it in the safe, and hope the world melts down. Seems quite strange behaviour to me."
I agree on property we just bought one to test a concept and will sell it soon - but we bought at a highly distressed price and it will yield circa 10% for the buyers after us. We bought below land value as a distressed asset purchase. Yes the world does need property - but is now the time?
Seriously I see no value in the property market and our internal readings on the deteriorating economic conditions, the banks, the interest rate cycle, sovereign issues, CDS market and litigation through the finance industry - the head winds are shocking. Without serious clout and experience behind us - well lets say I would not buy at all through the REstate shop windows for a few years from here.
But I note you do 'not' say 'now' is a good time to buy property just that 'you did' buy at a great time 15 years ago - so this is not relevant now - in present time except to keep that property. That is different to taking a new position. The current housing prices in general have been coming off and the top end more so. Coming off extreme bubble prices IMO, we can agree to differ.
On gold - I disagree (naturally) you buy it to hedge your position, as a CBank you buy to stabilize your currency during the unwind of the debt bubble and the sovereign debt crisis. Some of us bought at A$600+ and Ag at A$8+ and on upwards - so we did not 'bury' it we are making money on it just as you do via capital appreciation on property. We cannot rent it (physical) out that is the only difference.
If my modeling turns out to be correct also the gold companies will pay dividends in future, some do now - however I see this building on the continuation of golds bull market. Thus we do sort of rent the stocks out as they pay a yield and we get capital appreciation on top - just like your / my real estate.
Do not assume this gold bull should run the short duration of the 70's run. The fact is Nixon removed the convertibility on Au from the USD breaking Bretton Woods Agreement on 15th August 1971. He did so to stem the outflow of gold from the USA which had been gradually accelerating for a number of years before that. The French had broken ranks and started buying from 1968. The pressure had been building for years and had reached a very uncomfortable level for Nixon to take that extreme step. And why? Did he consider the gold no longer mattered? I don't think so that was the key international Agreement on the worlds reserve currency.
I also firmly believe the massive shorting from 1997 (as Barrick led the way and built a top global gold company from scratch) in a few years - gold may not have gone below US$400. That cup shaped section of the long term Au chart was directly attributable to this - along with the Central Bank leasing and selling. Not a conspiracy theory it is part of history and documented. They were unusual market forces at the time.
I took all this off the top of my head so if any dates are slightly wrong I apologize, I believe all the basics are correct.
The methods I have developed trading gold stocks are directly applicable to all trading and will stand me in good stead after the gold run is finished. The same techniques will help me to recognize the eventual top - not what I see yet. The fundamentals are still there, things are not 'all better' and the chances of shocks are extremely high as I have said so I like my chances better in gold and gradually move to exit strategies In later years of the rally as I play this wonderful opportunity.
If I am wrong about the shocks - China booms and supply demand takes care of the Au price and i still do well with bullion and gold stocks. Gold can do well with a strong economy too Skol it is not just about doom and gloom at all. As a tier 1 asset it has massive future (potential) demand IMO, already in force in Turkey and for some banks elsewhere I am told.
Now your last point, I also disagree on the cost of gold production. The WGC has reported inflated costs for several years - now we are at circa US$1200 an ounce not $600 that is years out of date. This has risen at an average $71 an ounce or there 'abouts' over recent years.
If your figure was correct the gold stocks would have been flying already, not just my lower cost out-performers. This day is coming but not at these cheap gold prices.
