May 29, 2006

This bust will be one that involves untold trillions of dollars, and will directly affect the value of every house in America


Fun read by the ultimate bear and gold bug - here's highlights - enjoy:

And this will not be just any old ordinary bust! No, sir! This bust will be one that involves untold trillions of dollars, and will directly affect the value of every house in America, because if you think that YOUR charming house will retain its over-inflated value while, all around you, house prices are falling and people are crying and wailing "The Mogambo was right! We're freaking doomed!", then you obviously do not understand the first damned thing about economics or real estate, and I feel sorry for you.

What's the worst news? If you are the government, for instance, that relies on the receipt of property taxes, sales taxes, taxes on gains, and all the documentary stamps and endless, expensive rigamarole involved with buying (and then again when selling) property, not to mention the income of realtors and title companies and lawyers and banks and mortgage companies and on and on and on, then THAT'S the bad news.

If, on the other hand, NMB also means less borrowing against the increased equity in your house, because there is not going to BE any more appreciation in the value of your house. This means aggregate, economy-wide spending of borrowed money will decrease, and the American economy will slow. By how much? Well, last year, GDP was boosted by something like $600 billion or so of additional spending, thanks to people increasing their mortgage debt. Hahahaha!

This means THAT particular stupid, childish, immediate-gratification insanity will soon stop, too. So, if you are a person whose standard of living depends on constantly extracting equity from the apparent appreciation in the "value" of your house during a seemingly-endless inflation in prices, then oops! Hahaha! The cruel joke's on you! This is how Father Nature takes care of the business side of life.

Equity withdrawal is, in bare essence, nothing more than increasing the absolute level of your mortgage debt and negating the entire gain in your equity. Hahaha! They ought to give the Anti-Nobel Prize for Sheer Economic Stupidity for these people, but there isn't one.

So, my Sweet Mogambo Cuties (SMCs), keep buying gold and silver, as they will rise in price for years and years and years to come

43 comments:

asdf said...

First, happy memorial day!

Anonymous said...

nice to see that here, i read it a week ago. (:

Anonymous said...

Texas will be fine. It will receive a lot of people from both coasts who want to live in an affordable house.

Affordability is 14% in CA it is 50% in Texas.

Anonymous said...

gold is gonna go down..Keith, run.

skytrekker said...

Affordability for the median income in central Connecticut is over 60% -I would surely rather live here then any part of Texas anytime ever.

Anonymous said...

All you clowns pushing gold are as funny as these clowns pushing real estate...

fish said...

Hey.....if gold is as useless as some of the "anons" say why is it the bedrock transaction material/currency between central banks (answer...because central banks know how other central banks work and they don't want to get screwed either)? How come china is going to reweight their foreign currency reserves to include a greater percentage of gold? Oh yeah, they didn't check posts 4 and 6 on this thread! Maybe somebody should refer them!

Anonymous said...

good one fish :)

zinger said...

Fish you made my day.

Richard said...

Not to mention Putin and Russia selling oil in gold beginning June 8th...ooopps...buh bye US$

Out at the peak said...

I hope anon is shorting gold if s/he really believes that. Otherwise if you're out of the game, how can we listen to you?

keith said...

frankly, folks, I could care less where gold and silver go day to day from here on out. I've made my bet, and 2 years, 5 years from now, I'm planning on being right

it went up too fast, and this correction, albeit a small one, is a good time to buy some more

we'll revisit and surpass those $730 highs soon enough

even though we may see $600 before we see $730

bgmanofid said...

The Mogambo Guru has more intelligence and sanity than David Lereah. I know that for a fact.

Anonymous said...

keith /others.
seriously can you tell us what percentage of your assets are in gold..is some one out there w/ cahunas having 35%+ gold investment?

Anonymous said...

keith has no cahunas........he buys at 65, touts GLD IS RISING when it hits 70, then panics and sells at 62

he buys back in at 63.....then says that gold will hit 730 (or 600)

no cahunas.......if he knew where gold was going (730 or 600), he wuld make a killing either way

Anonymous said...

I count my savings in the total weight of Gold and Silver physical bullion.

Keep enough Fiat on hand to pay day to day expenses.

Increase physical positons as positive cash flow permits.

Will only tap physical for emergency. Plan to leave hugh non-taxable hoard to my kids.

Boomer/Renter/etc. said...

Dear Keith,
Is this true?
http://tinyurl.com/lno8a
The U.S. Govt’s
Secret Colorado
Oil Discovery

Anonymous said...

It is true and it's not a secret. Canada has even more oil shale in Alberta. The problem with oil shale is that it is expensive to recover.

Anonymous said...

and slow...

www.financialsense.com did a radio interview with some expert, sorry I don't remember who; but this guy did address the oil shale issue and said something to the effect that:

the net Energy returned on Energy Invested is very very low. In summary he said that oil shale could not replace middle east oil dependence anytime soon (within the next 10 to 15 years).

Anonymous said...

The Mogambo is my hero!

Re: "cojones"

$1,100,000 in gold mining companies trading account (positions taken in 2002)
$750,000 on gold PM retirement
$200,000 in TIPS
100+oz Au
? silver (too heavy to count)
$300,000 mobile home paper
$600,000 6-plex

FLOPS:
$75,000 diagnostic radiology "no lose" private placement
$250,000 trading company (writing S&P options)

I just did what Robert Kiyosaki said: "mind your own business", market timing-interest rates-laws, start small and learn, 3 classes of assets: RE, paper, biz, and 3rd piggybank to buy precious metals (see richdadgold.com)

Anonymous said...

What fish said...

If gold is useless why do the central banks store it in their safes instead of storing fiat paper currency???

If you want an education no one understands gold better then www.jsmineset.com

boomer/renter/etc. said...

3 classes of assets: RE, paper, biz, and 3rd piggybank to buy precious metals.

That looks like 4 assets to me: Real Estate, PAPER? BIZ ? and metals....could you explain to me?

Boomer/Renter/etc. said... said...

oh, duh. paper is cash...so what is biz?

Anonymous said...

like .biz - business.
"An asset is something that puts money in your pocket", so gold is not an asset.
It's just money.
One biz is doing well - MH paper (highest risk paper in USA); the S&P witing biz flopped because we did not stick to the biz plan.

Paper is stocks, bonds, mutual finds, derivatives that you do not control/originate/create or are not the market maker.

Anonymous said...

I have found jim sinclair's timing to be off (e.g., call for 480 a few years ago), but his advice of minimal to no leverage is spot (no pun intended) on, especially with increased gold volatility, whether short, long, spreading or straddling. His overall directionality I believe to be correct.

HELOCing Americans are going to get (or are being) caught out, and so to quote the Mogambo, "we're freaking doomed"!

Richard Russell of dowtheoryletters.com, now in his 80's, has been in cash (short term treasuries) and gold for several years, and also has an S&P option writing biz. His rule of thumb is that a RE investor should expect 10% carrying costs of a property (PITI, "deferred" maintenance, etc), otherwise they will be upside down in short order. The T and I are going up-up-up.

As per Jimmy Buffett's cousin, "we'll see who is swimming naked".

Anonymous said...

(con't)
We're studying the newly-available US city-specific real estate futures as a supplement to trading minimally-leveraged gold futures.

All futuresource listings have "1!" after the 3-letter ID, e.g., BOS1!.

Boston (BOS)
Chiacago (CHI)
Denver (DEN)
Las Vegas (LAV)
Los Angeles (LAS)
Miami (MIA)
New York (NYM)
San Diego (SDG)
San Francisco (SFR)
Washington DC (WDC)
Composite (CUS)

autofx in Phx said...

Anonymous said...
keith has no cahunas........he buys at 65, touts GLD IS RISING when it hits 70, then panics and sells at 62

he buys back in at 63.....then says that gold will hit 730 (or 600)

no cahunas.......if he knew where gold was going (730 or 600), he wuld make a killing either way


I agree with this assessment. If some of you read this to get investment and trading advice from Keith, you are looking in the wrong place. Keith is astute enough to see economic problems, but he shows no signs of being a skilled or experienced investor or trader.

autofx in Phx said...

Anonymous said...
The Mogambo is my hero!

He's zany and continues to coin those Random Useless Tedious Mogambo Acronyms (RUTMAs), but if you read his articles, he injects some serious analysis and I believe his thinking is sound.

Anonymous said...

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Anonymous said...

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Anonymous said...

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Anonymous said...

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Anonymous said...

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Anonymous said...

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Anonymous said...

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Anonymous said...

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Anonymous said...

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Anonymous said...

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Anonymous said...

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Anonymous said...

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Anonymous said...

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