Speaking of 'Tulip Mania'

It's 2011 and there is definitely an emerging 'theme' to real estate for the early part of this year.

As you know, for the past six months there has been a dramatic decline in the number of real estate sales. Yet the average price of houses seems to be rising - huh?

Realtor Larry Yatkowsky commented on this right off the bat as the New Year started.

• "Vancouver real estate’s New Year is starting off with a bang. For the first time in many months, the aggregate number of properties for sale in the lower mainland has tumbled below the 17,000 mark. Vancouver Realtors® began whispering in the early part of December that it was becoming more difficult to find quality homes for their buyers."

Declining inventory leads to bidding wars as buyers fight over a shrinking pool of available inventory.

Interestingly a similar situation has been developing in Australia.

Australia has also gone through a stretch where listings have been declining. Predictions by realtors Down Under have called for R/E prices to remain stable or grow by 5-6% in 2011 due to an underlying shortage of properties.

But new figures suggest that the Aussie shortage has been overblown and that the figures "dispel the myth of property undersupply in most cities, and says certain capitals such as Brisbane are actually recording a dangerously high level of properties on the market."

And just who do you think propagated that 'myth'?

During the 2008/2009 slowdown, the local real estate industry urged sellers to pull listings off the market. This was a strategy, done on purpose in order to create 'demand' and stave off further declines.

The same strategy was urged by the Industry during the Fall months as the media was besieged with month after month of negative press regarding declining sales.

In Australia, the Reserve Bank is contemplating another rate increase and it is suggested that such a move could accelerate a downturn just as the pent up supply from a contrived 'shortage' hits the Spring market.

Is the lack of supply a R/E fueled lie? Is the truth more a case of the fact that there is no lack of supply, just speculators sitting on a lot of inventory that can/will be put on the market in short order?

American blogger Mike "Mish" Shedlock thinks so and examines the Australian developments in this eerily familiar sounding post title: Australia's "Tulip Mania" About To Crash, As Housing Shortage Proves A Massive Myth.

I say 'eerily familiar' because it was just yesterday I was comparing the situation in the Vancouver suburb of Richmond in the same 'Tulip Mania' fashion.

Mish concludes that:

• "The day of reckoning has finally arrived for Australia. A day of reckoning awaits Canada, China, and the UK as well. It's too late now to do much of anything except:
  
  * Exit the Australian stock market
  * Get out of the Australian dollar
  * Pick up some popcorn
  * Stay on the sidelines and watch the collapse unfold"

I'd personally recommend getting the Costco size case of 'Jiffy Pop' myself.

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Tulip Mania in Richmond

Last night I was talking to a colleague about Tulip Mania.

Tulip Mania was a period in the Dutch Golden Age when the tulip flower was introduced.

A mania gripped the Dutch and contract prices for bulbs of the tulip reached extraordinarily high levels and then suddenly collapsed. The era has become known as one of the first 'economic bubbles'. At the peak of tulip mania, in February 1637, tulips known as ""the Viceroy" (which is pictured above) would fetch between 3000 and 4200 florins depending on size.

A skilled craftsman at the time earned about 300 florins a year. Thus some single tulip bulbs sold for more than 10 times the annual income of a skilled craftsman.

The term "tulip mania" is now often used metaphorically to refer to any large economic bubble (when asset prices deviate from intrinsic values).

Which brings us to Richmond.

Once most famously known as the home of former Premier (and gardener) Bill Vander Zalm and his Fantasy Gardens attraction/mall, the Vancouver suburb is now one of the Lower Mainland hotspots for what has infamously come to be known as Hot Asian Money.

So crazy is the housing market in Richmond right now, that one house near Gilbert and Francis Road at 6531 Dunsany Place recently sold for $300,000 above asking price.

From the listing description:

• Lovely 4 bedrooms plus den, 2 1/2 bathroom family home situated in the sought after desirable "Woodwards area". Perfectly located on a quiet cul de sac - steps away from Blundell Elementary, London Secondary, and conveniently located to Blundell Elementary, London Secondary, and conveniently located to Blundell Shopping Centre. A comfortable, warm home surrounded by a community of new families. Well maintained with newer roof, exterior paint, renovated bathroom with soaker tub. Garage is wired with 220 and perfect for those wishing a workshop area.

The house was listed for $798,000 on Nov. 29. After receiving an astonishing 49 offers the house sold on December 6th for $1,111,111.

No word on whether or not the Realtor threw in a complimentary bag of tulip bulbs on behalf of the seller.

But that example isn't unique. Check out this beauty:

This little 1,100 square foot mansion is located at 7480 Petts Road in the Broadmoor area of Richmond.

It was listed at $1,080,000 and sold for $1.22 million!

A contributor to Garth Turner's blog recently commented:

• "Buying at these prices you’d have to be the greatest fool indeed. Sorry Vancouver, but you’re just not worth it. Trying to create wealth by lowering interest rates is a short term ponzi scheme at best. This equates to printing money. Wouldn’t it be nice if governments could print their way to prosperity? You can’t fool all the people all the time. I don’t wish this on my fellow Canadians but I can smell the reckoning day.”

Looking back through time it’s easy to laugh at the foolish Dutch, paying such prices for simple tulip bulbs, but an economic bubble was nothing new even then.

We are no different. Real Estate has become our tulip bulb.

Human beings have always been prone to want things that are difficult to get, especially if everyone else seems to be doing it. Nutty behavior becomes commonplace when enough people are following along.

It’s only afterwards that we stand back and shake our heads and wonder what came over us.

And there is going to be one hell of a lot of head shaking going on before long.

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Battle of the Form Letters

Yesterday we made reference to the CREA's campaign to keep Finance Minister Jim Flaherty from changing the mortgage rules.

As part of that campaign, Realtors are being urged to fill out this form letter and send it off to their local Member of Parliament (click on image to enlarge).

In a blogosphere response, one of the contributors to the Vancouver Condo Info website (Jessie) has put together a form letter to urge your Member of Parliament to encourage the Finance Minister to follow through with mortgage changes. Here is the content of the form letter:

• To: Hon. Jim Flaherty
  Your MP's name here
  
  Sirs,
  
  I am writing you supporting potential changes to mortgage financing rules in the upcoming year. As you are undoubtedly aware, the average Canadian household debt to household income ratio has increased significantly in the past number of years and has now exceeded that of the United States. This was made possible by historically, and unsustainably, low interest rates on mortgages. As has been shown in other OECD countries, there is some evidence to suggest that households are primarily concerned with their short-term financial health -- the ability to service today's debt with low interest rates -- and less concerned with their long-term financial health -- the inability to service service tomorrow's debt with high interest rates. I have not seen any data or arguments to suggest that household debt will start decreasing in the coming year as long as interest rates remain low. My concern is that without further tightening of mortgage financing rules, Canadians will continue to take on debts that are unsustainable in the long-term.
  
  While I am a believer in free markets, the growth in household debt is not sustainable when interest rates rise and I am not confident households will start saving while debt is so "cheap". If measures are not taken sooner rather than later, the resulting overhang of debt will put Canada at a distinct disadvantage relative to its trading partners, whose households have started to rebuild their balance sheets and will be in a much better position to weather the inevitable interest rate rises in the coming years.
  
  Sincerely
  Your Name
  Your Address

Choose your weapon.

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Today's letter is M: As in Media and Manipulation

Garth Turner covered this yesterday and I wanted to take the time to point it out to my colleagues who read this blog.

The battle over mortgage terms is starting to heat up. As many of you know Mark Carney, Governor of the Bank of Canada came out in December with another salvo of debt warnings. This was followed up by a couple of Banks (TD, BMO) calling on the government to take the initiative because they could not be expected to curb debt lending for competition reasons.

The concern? The vast majority of new home loans are being written are 5/35ers and the debt loads are becoming alarming amongst Canadians.

Carney has been urging Ottawa to do something about it as well and Finance Minister Jim Flaherty has hinted changes might be coming.

Enter the Canadian Real Estate Association (which represents Realtors).

Real estate agents and brokers are being urged to write their MPs immediately to counteract this move. They argue that mortgage debt isn't the same as other consumer debt. It's “the foundation of household equity and a gateway to financial security.”

More importantly, it's the foundation and gateway to Realtor financial security (aka paycheques).

• “Additional changes to mortgage financing rules would raise the barrier to home ownership excessively and destabilize housing markets and the economy. In particular, we are concerned about the negative impact modifications to the allowable amortization period or minimum down payment requirements would have. These changes would create affordability problems, especially for first-time buyers. First-time buyers are the first link in a chain reaction of real estate activity. They allow existing home owners to change properties or rent.
  
  “Creating burdensome barriers for first time buyers will seriously impact the rest of the market, including retirees looking to downsize. Further tightening of mortgage rules would have other far reaching consequences for the economy. It risks causing a home price correction, a drop in the net worth of Canadian households, lowered economic growth and reduced tax revenues. Consumer confidence would be damaged, labour mobility would be impeded, and unemployment would stay elevated.”

In a desperate attempt to save paycheques, this urgent communication has been sent out to all member Realtors (click on image to enlarge):

Meanwhile, despite concerns that these moves could kill the real estate market, the full court press is being applied to get the general public to BUY, BUY, BUY before they are priced out forever.

Royal LePage has come out with a report predicting real estate prices increasing in Canada in 2011 far more than expected. The report is titled, "Strengthening Economic Recovery and Low Interest Rates Point to a Stronger Than Anticipated 2011 for Housing Market".

This is in conjunction with the R/E industry's own version of the Art of Media Manipulation. Newspaper articles touting the R/E line magically appear at the same time.

The Globe and Mail tells us "House prices to see steady climb", the Toronto Star tells us "Canadian housing prices set to rise in 2011" and the Toronto Star warns that a looming "Buying frenzy to push up house prices".

Seems to me if the government simply tightens regulations, prices will fall and then people can buy houses at affordable prices, a move which will make Carney happy and keep Realtors employed as more houses trade hands.

But I guess if you eliminate the huge commission from the sale of multi-million dollar homes, Realtors will have to work harder.

Silly me.

Over in the Silver Corner

Two interesting items for you from yesterday in Silver.

First from Zero Hedgee comes this announcement that the CFTC will be voting on 10% position limits next week in an attempt to control the rampant manipulation going on in precious metals.

Second is this thread on a Yahoo messageboard. This could be interesting just for the speculative value if this goes viral on the internet:

• New Year Strategy from Blythe's Former Traders 5-Jan-11 02:04 pm
  
  Blythe,
  
  This is what I am hearing from your former traders (who made "very interesting career decisions"). Well it seem that they are on to a new scheme to corner the Comex and drive the price of silver up $10 to $15 dollars in a matter of weeks.
  
  The strategy is as follows. We know that Comex only has 105 million ounces of silver of which only 50 million ounces are available for delivery. (I personally don't believe the Comex numbers are anywhere near that high, but that is neither here nor there for now.) Well, all it would take is 10,000 contracts on the Comex to buy up all the "available silver" at the Comex and 20,000 contracts to deplete it completely. The current front month March OI is north of 78,000.
  
  Watch the OI closely. Blythe's former traders are advising major hedgefunds and billionaire investors to buy up as many contracts as possible as March 1 approaches and deposit the cash needed to stand for delivery for the month of March. The purpose is not necessarily to bust the Comex but to force the Comex to pay a premium (some as much as 30 percent) for cash settlement. Think about it. If a group of hedgefund gets together and bankroll $1 billion, they can buy more than 30 million ounces of silver. Of course, the contract sellers like The Morgue cant deliver the silver so a cash settlement is the only recourse. So what's wrong with $200 million in profit on a $1 billion investment that takes less than 4 weeks total?
  
  Guess what Blythe? Your former traders are advising everyone they know to put on this trade come the first week of February. Is this what happened in the December contracts? Is this why silver went from $22 on September 30 to $29 by December 1? How much do you think silver will spike in February as we approach March 1? The traders think silver will be north of $45. Heck it went over $9 as we approached December and everyone who got a pay off in terms of a premium cash settlement will be back for more. And they are all gonna be bringing friends to partake in the bounty.
  
  Your former traders are telling everyone who would listen that all they need to do is purchase a huge amount of March contracts near the end of February and stand for delivery and they will all make 20 percent in a matter of days. Is this what you are hearing Blythe? If so, shouldn't you let the price of silver move up so that you can get some physical to deliver before March 1?
  
  Either way
  
  You're going home in a body bag, do-da, do-da...

Ahh fun times everywhere, eh?

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Foreclosure in Washington and Sprott on Silver

Interesting article in the Seattle Times.

Seems the largest condo development ever undertaken in the American Pacific Northwest, basically a two hour drive from Vancouver, has been foreclosed on.

Portland-based Gerding Edlen, the developer of Bellevue Towers, has turned over the development to their lenders, an entity led by investment bank Morgan Stanley. If the development wasn't turned over, Morgan Stanley would have moved to foreclosure.

The new owners announced price cuts to help spur sales at the 539-unit development, where just 118 sales have closed since the two towers were completed nearly two years ago.

The development is two towers of 43 and 42 stories. Gerding Edlen built them in large part with $275 million borrowed in January 2007 from a consortium of lenders led by Morgan Stanley.

"This is an acknowledgment that prices today aren't what they were," Ira Glasser, an adviser to Morgan Stanley, said Monday.

When Bellevue Towers opened in February 2009, condo prices ranged from $399,000 to $4.4 million. A Gerding Edlen principal predicted the project, at Northeast Fourth Street and 106th Avenue Northeast, would sell out in two years.

Five months later, with less than 10% of the units sold, Gerding Edlen cut prices an average 20%. With the additional reductions announced last week, average prices are 30$ lower than two years ago, Glasser said.

County records indicate just three condos have sold over the last three months.

Meanwhile 2 hours north, Vancouver preens about it's resilient housing bubble.

Sprott Asset Management and Silver

Silver trading continues to be incredibly strong despite the raids from the last two days. From the source who follows the Comex:

• "The total open interest on silver remained resolute at 136,931 up a huge 645 contracts with a huge pummelling of silver by almost $1.60 yesterday. I think the bankers were more frightened with this figure than with gold. I may be mistaken but the bankers have been trying for the past month to shake the silver leaves from the comex tree and they have failed time after time. The front options delivery month of January saw its open interest mysteriously rise from 55 to 59. The estimated volume on the comex today was a monstrous 83,889. The confirmed volume for yesterday was 88,172. This is a far cry from the 16,000 contracts traded during the last week of 2010."

But the big silver story of the day comes from Sprott Asset Management.

Sprott runs a silver fund that is completely backed by Silver assets. And Eric Sprott is having trouble getting silver. Yesterday his chief lieutenant John Embry was on Eric King and predicted, based on the difficulty in acquiring physical silver, that he see's the price of silver rising above $50 in 2011 (he sees Gold going to $2000 for the same reason).

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It's Winter... but things are heating up.

So what the hell happened yesterday?

Last week you will recall this post I made and how I commented that the precious metal markets have become almost comically predictable lately and that Tuesdays were raid-free days.

You have JP Morgan (with their massive buying of shorts to drive down price) squaring off against some very large buyers who step in and counter the downward manipulation with strong buying.

These two forces are the primary drivers of price right now and there is almost a predictable pattern to what goes on. Lately JP Morgan raids the market twice daily between approximately 8:00am EST and 9:00am EST. Once that happens, the large buyers step in and buy the dips driving the price of silver back up.

In that post last week, I showed you Wednesday Dec 29th, 2010. Silver was raided at precisely 8:20 EST, taking $0.11 out of the price in under a minute. As usual, they sat back and watched for five minutes and then struck again at 8:25am, taking out another $0.11 in about 30 seconds. Then the large buyers stepped in and silver rebounded. (click on all charts to show an enlarged version)

Then I showed you, Dec. 30th, 2010. Silver shot up to $30.93 on the overnight trading. Silver was driven down from $30.93 and suffered two significant raids (just like December 29th) at 8:26am EST and then again at 8:31am. Silver was ultimately driven down to $30.30. Then the strong buyers stepped in again.

Silver ended the week, the month and the year at $31.90, the highest year end level ever.

This was NOT how the year was supposed to play out. In June, 2010 (when silver was sitting at $18 an ounce) J.P. Morgan analysts gave silver a long-term price forecast of $13 an ounce.

Then along came the CFTC with their investigations into manipulation of the markets.

It is no small coincidence that, with the scrutiny of the CFTC, the pattern of shorting silver by J.P. Morgan was restricted.

Silver went on a 4 month tear, rising 70%.

As mentioned last week, an analyst I follow observed that gains in silver are often made early in the week and selling usually occurs later in the week. The pattern repeats so frequently that it was clear it was not coincidence.

He concluded that J.P. Morgan was trying to hide their malicious intent from the weekly Commitment of Traders report. This is a report on the market that comes out every Friday but it is based on the previous Tuesday. So, any new short positions initiated JP Morgan on a Wednesday will not show up on the CoT until the next Friday. Thus JP Morgan has until the next Tuesday to cover any brand new shorts they just initiated if their raids fail.

So every week, down go metals mid-late week on fresh paper-metal selling; up go metals early the following week. If shenanigans fail, the shorts are covered before new CoT survey.

Tuesdays are almost regularly raid free days.

This week that pattern changed.

While Canadian stock markets were closed on January 3rd, the precious metal markets were open. As you would expect, Silver was raided right on time at approx 8:25am EST and then again 5 minutes later (times are not marked on the chart for Jan 3rd). There was also a third significant hit at approx 8:55am EST:

As the day wore on, some very significant developments emerged.

Scotia Mocatta's latest technical note forecast came out and stated that "the next major [Silver Price] target remains the 1980 high of $49.50."

Combine that sort of speculative fervour with what happened at the US Mint on Monday.

As I mentioned last week, the US Mint suspended the production of American Eagle Silver Uncirculated Silver Coins because of unprecedented demand for American Eagle Silver Bullion Coins. As it has been pointed out to me, there are 3 types of silver eagle programs initiated by the mint:

1. highly polished and specialized proofs.
2. uncirculated silver oz eagles.
3. regular 1 0z bullion which is not highly polished or uncirculated.

The mint can suspend the first 2 but cannot by law stop the 3rd as it is compulsory for them to mint bullion coins with available silver from the USA.

Well... Monday was the first day of the New Year for coin sales. And sell coins they did. The US Mint reported it sold nearly 1.7 million Silver Bullion coins on Monday, the first day of American Eagle 2011 sales – equal to almost 5% of 2010's entire silver coin sales.

Talk about silver fervour!

But all that is only fodder for the big news on Monday.

Rumours started circulating that CFTC Commissioner Bart Chilton had changed his position on the position limit question.

On December 16, 2010 the Commodity Futures Trading Commission introduced its plan to curb speculation in metals, agriculture, and energy markets. But at the meeting, Chairman Gary Gensler abruptly postponed a vote on the proposal.

Commissioner Chilton, the most vocal proponent of cracking down on speculators, was key to the postponement as he told Reuters he would have voted against the plan. It would have included a two-step approach to allow more time for the agency to gather information on the opaque swaps market.

Confirmation that he had, indeed, changed his position was announced Tuesday.

"While I will now support publishing a position limit proposal for public comment, I will continue to make the case that we need to address excessive speculation in these markets immediately," Chilton said in a statement.

Chilton's decision will now allow the CFTC to go ahead with a 60 day period of public input (which will solve nothing, but is part of the process).

The key element here is that it allows J.P. Morgan to become a little more bold in their attacks, knowing that they have another 60 days to carry out their nefarious activities.

And with Silver and Gold catching fire, urgent action was needed.

That boldness started on Monday with the three attacks on Silver.

In the overnight trading, Silver was also attacked in the Globex.

And then - for the first time in 4 months - Silver had raids on a Tuesday.

Naturally they came during the 8:25ish EST time frame. They came at 8:20, 8:21, 8:23 and 8:42-44.

Really? Seriously? I mean... c'mon... a monkey can see the break from regular trading patterns as the paper shorts attack. The fact these come at almost the exact same time each day only makes it that more obvious.

As I have said, 2011 will set the stage for some violent swings in the price of silver and gold (gold was hit the same way).

And now we get to the signal that things are really getting desperate.

Besides these shenanigans, what really caught my eye yesterday was the placement in yesterday's media of a series of anti-metal news articles like this one from Bloomberg.

This is no coincidence that these articles came out today. They are timed placements.

When the BC Liberals were in opposition at the end of the 1990s, I was involved in several presentations to the BC Liberal Caucus.

It was an educational experience... watching the way the media process and political game was played.

On four seperate occasions we were invited to attend the Legislature. Our presence in the gallery would be announced at the start of the session as part of the Question Period introductions. We had been tasked the week before with meeting certain media reporters with the theme of our issue. The morning of our apppearance in Victoria, several articles about our issue would 'appear' in Victoria and Vancouver newspapers. After Question Period, after government Minister's had been grilled on our issue, the press would follow up on what had happened in the Legislature. Coverage of our issue would splash across the newspapers for the next 3 days in articles and Op Ed columns as a result of the interest generated from Question Period.

It was all part of the highly scripted art of media manipulation.

I saw some of the same thing happening in precious metals yesterday.

A hard core, co-ordinated attack on precious metals combined yesterday with a timed media blitz that attempted to create a gold/silver selling frenzy.

It's a sign of how concerned the cartel is becoming.

One analyst of the Comex I follow had this to say last night:

• "For the past week, we have seen an equilibrium between buyers and sellers in gold at around 75,000 contracts. Today the estimated volume at the gold comex was 240,871 and when the confirmed volume comes in I can assure you it will be much higher. The modus operandi of the crooked bankers is simple. They withhold all bids to buy as they tell would be purchasers to hold off as they will get their metal cheaper. Then they bombard with over 100,000 contracts that are totally un-backed and they trip some of the longs who have stop losses below the spot price. This trips other stop losses as the price goes lower until it reaches its nadir and the bankers slowly try to cover all their shorts. This is collusion, as all the bankers are told in advance when the raid is to be expected. Then they supply paper with no backing to gold or silver whatsoever."

The paper short raids trigger dramatic immediate drops in the silver price. These drops trigger selling by investors who have placed automatic stop loss levels on their investments. The selling induced by the stop losses trigger a further drop in metal prices. And as a the media simultaneously floods the medium with stories that gold/silver are ready to crash, panic selling triggers further losses and - the cartel hopes - more selling.

Personally I wasn't expecting this until February. But for the reasons I have outlined above, the fireworks are getting started right off the bat with the New Year.

Ultimately the fact of the matter is the $14 Trillion US debt is still there. The $3Trillion US deficit is still there. The US Federal Reserve is still printing money even though Bernanke says he's not. The US Dollar is still a huge matter of concern to China, Russia et al and the real US unemployment rate is still 20% or so.

The problems have not gone away.

And neither will the interest in both gold and silver.

We do live in interesting times.

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The author(s) of the posts on this site are not investment advisors and they do not offer investment advice. They try to provide some hopefully useful data with sources - especially concerning real estate - and then add their own analysis.

All the content on this website is solely an expression of the author's personal interests and is posted as free-of-charge opinion and commentary. Nothing here is intended as investment advice. If you seek investment advice, consult a registered, qualified investment advisor.

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Comment on today's precious metals

My comments on today's Silver markets will come out later tonight or early tomorrow.

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The Secret of Oz

Yesterday I referenced Bill Still's 'The Secret of Oz'. I received an email advising that you can now view 'The Secret of Oz' on youtube. It's embedded above.

It an excellent explanation of the evolution of the money sytem and goes in depth where yesterday's cartoon could not. I encourage everyone to check it out (heads up, it's almost 2 hours long). It also covers the Panic of 1873, and 1893 mentioned in yesterday's comments section.

If you like, this is a 4 minute trailer of 'The Secret of Oz'.

I may have an additional post later in the day if I am able.

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Great little cartoon

Above is a creative 30 minute cartoon I came across while reading ZeroHedge today.

You may recall a post I made on December 21, 2009 that detailed an excellent video called the Secret of Oz.

The Secret of Oz is a follow up film by Ben Still to an earlier work titled, "The Money Masters: How Banks Create the World's Money".

In 'The Secret of Oz', Still argues that the United States is headed for a deep depression unless lawmakers address the root of the problem: mounting interest payments on the national debt.

America once abolished their central bank after a massive debate and political battle. The reasons bare stark similarity to many of the economic problems currently being encountered.

From 1836 to 1913 there was no central bank. This is also a period of massive American prosperity.

America could fund it's economic system without incurring any Federal debt.

In 1913 the bankers won the political battle and the concept of a central bank was restored: The US Federal Reserve was born.

Every time a dollar is created, it is a loan to the Federal Government... a debt that must be repaid with interest, money acquired through income tax (it's no coincidence the IRS and the concept of income tax was also created in 1913).

Above is an interesting little cartoon that attempts to explain the battle over the concept of the central bank... and the role of banks in the housing collapse and credit bubble of the last few decades.

All money is created out of debt, but it doesn't have to be that way. Nations don't have to borrow money from banks. Sovereign nations can create their own money - debt free - just as it was done from 1836-1913.

It's a broad, difficult concept to fully appreciate.

But as this new decade dawns, I believe - in review come 2021 - this topic will be seen as one of the BIGGEST issues of this decade.

This cartoon attempts to examine the issue. I encourage you to track down a copy of the Secret of Oz and check out this cartoon if the topic interests you.

From the description of this cartoon video:

• The AMERICAN DREAM is a 30 minute animated film that shows you how you've been scammed by the most basic elements of our government system. All of us Americans strive for the American Dream, and this film shows you why your dream is getting farther and farther away. Do you know how your money is created? Or how banking works? Why did housing prices skyrocket and then plunge? Do you really know what the Federal Reserve System is and how it affects you every single day? THE AMERICAN DREAM takes an entertaining but hard hitting look at how the problems we have today are nothing new, and why leaders throughout our history have warned us and fought against the current type of financial system we have in America today. You will be challenged to investigate some very entrenched and powerful institutions in this nation, and hopefully encouraged to help get our nation back on track.

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Real Estate vs Gold/Silver/Mining Stocks

As the year came to an end, I made a whole series of posts about the topic of Silver. I have also said that the road ahead is going to be rocky with some very violent swings up and down.

So I was asked by a colleague... do I think Silver will still be a far better investment in 2011 than real estate?

2011 is the start of the boomer retirement wave. Every single day this year, 1,000 Canadian boomers and 10,000 American boomers will be retiring.

That's each and every day.

And statistics show that 70% of Boomers do not have adequate funds set aside for retirement. Their plan? Sell their massively inflated housing asset, downsize and live off the difference.

In that sort of environment, can the forecast for Real Estate be anything but bearish?

Meanwhile the United States government is rapidly approaching the debt limit. By early March the Americans will be forced to once again extend the $14.294 trillion debt limit.

In 2011 the two key traditional drivers of economic growth and prosperity, employment and housing, will likely continue deteriorating (US employment ended the year over 9%). In other words, all growth in 2011 will be predicated upon very much more of the same as in 2010: transfer payments and government stimulus (not to mention inventory accumulation) especially in the form of incremental debt to offset consumer deleveraging.

In that sort of environment, can the forecast for rising precious metals be anything but bullish?

So, of course, the answer to my colleague's silver vs real estate question is, Yes... investing in silver is still the way to go.

With that in mind, let's start with a comparison to start 2011 and check back on it over the course of the year.

As put together by Realtor Larry Yatkowsky, here is the chart for the Vancouver Real Estate Average price for year end 2010:

The average detached home sales price is $1,046,348.

Let's pretend that one investors buys a house for $1,046,348 (we won't factor in taxes, commissions, etc).

Another investor purchases $1,046,348 of physical gold at the year end closing price of $1,421 per ounce. He obtained 736.346235 ounces of physical gold (we won't factor in buyer's premium on gold).

Another investor purchases $1,046,348 of physical silver at the year end closing price of $30.91 per ounce. He obtained 33,851.4397 ounces of physical silver (we won't factor in buyer's premium on silver).

Finally let's also select three Canadian mining stocks of the basket I follow.

Let's buy $1,046,348 of First Majestic Silver (FR) at the year end closing price of $14.40 per share. That investor obtains 72,663.0556 shares of FR (we won't factor is the commission fee).

Another investor buys $1,046,348 of Almaden Minerals Ltd (AMM) at $4.73 per share. He obtains 221,215.222 shares of AMM.

Finally our last investor buys $1,046,348 of ECU Mining Inc (ECU) at #1.34 per share. he obtains 780,856.716 shares of ECU.

Real Estate, Physical Gold/Silver or Gold/Silver Mining stocks... which will do better in 2011?

it's a simplified comparison, but we'll check back periodically throughout the year to compare them.

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Shanghai Daily: It's only a matter of time before China's housing bubble bursts

Excellent post today regarding China on the Australian blog, The Unconventional Economist. It articulates the issue succinctly.

China has, on a per captia basis, pumped more money into their economy than the Americans.

While most are viewing the results as the growth of an emerging economic superpower, the reality is that China's economy has become over-dependent on fixed asset investment - i.e. the building of infrastructure, real estate and manufacturing plants.

This over-investment in fixed assets, which now comprises a whopping 60% of China's annual GDP, has caused China to build far too many things (apartments, factories, etc) that are not needed, resulting in significant over-capacity.

We have seen this time and time again in bubbles everywhere.

One only has to view footage of China's empty cities on youtube to understand the extent of this malinvestment.

Jim Chanos, founder and president of New York investment company Kynikos Associates, famously described China's fixed asset malinvestment and manufactured growth earlier this year as "a treadmill to hell".

China has a massive over dependence on real estate construction. They have built entire cities that are now sitting empty. Yet, despite this over building, construction is continuing, with 12 million to 15 million residential units this year.

These units, which are priced similar to those for US residents, are intended for Chinese workers who earn about $3,500 annually and are in the bottom 20% of wage earners. To make matters worse, many of the Chinese who have moved to cities from the country are construction workers. So when the construction slows, many will likely move back to the country-side, leaving a construction ghost town and one massive financial black hole.

• “Construction is 60-plus percent of GDP, compared to exports of 5 percent... The problem is that consumption as a percentage of Chinese economy has declined in the last 10 years, from 40 to 35 percent. It’s all real estate...When construction is 60 percent of your economy, and you are building lots of things that people don’t need, the state may let this get out of control... It’s hard to manage this type of bubble".

Now Business Insider has provided proof of China's over-building and malinvestment with alarming satellite photos of entire cities laying vacant. From their article:

• "The hottest market in the hottest economy in the world is Chinese real estate. The big question is how vulnerable is this market to a crash.
  
  One red flag is the vast number of vacant homes spread through China, by some estimates up to 64 million vacant homes.
  
  We've tracked down satellite photos of these unnerving places, based on a report from Forensic Asia Limited. They call it a clear sign of a bubble: 'There’s city after city full of empty streets and vast government buildings, some in the most inhospitable locations. It is the modern equivalent of building pyramids. With 20 new cities being built every year, we hope to be able to expand our list going forward.'"

Last week Yu Yongding - a prominent economist from within the Chinese establishment - published a scathing attack on China's economic model in the state-run China Daily. This article supported the concerns voiced by external commentators over the Chinese economy.

Now the Shanghai Daily has published an explosive article entitled: It's only a matter of time before China's housing bubble bursts.

The Unconventional Economist notes that China's housing bubble is approaching Japanese proportions. Back in the 1980s, Japan's residential housing values reached a stratospheric 3.8 times GDP at the peak of its bubble. As of February 2010, China's housing values were 3.5 times GDP.

In the heyday of Japanese prosperity, the land value of Tokyo alone exceeded that of the entire United State. This 'wealth effect' had Japanese tycoons considering buying up America.

What happened to Japan is well known history.

Will China follow a similar pattern?

The Unconventional Economist speculates on how a collapse in China could devastate Australia.

The ramifications are no different for the Village on the Edge of the Rainforest.

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Happy New Year

A happy and prosperous New Year to all who visit this blog today.

Tomorrow marks the official start of a new decade. Below is an image which I believe captures the theme of the next decade. Click on the image below to enlarge it.

If real estate became the theme of the 2000's, this represents what I believe will be the theme of the next decade: Scotiabank is sold out of 1 oz and 100 oz bars of silver.

Happy New Year All...

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Last comments on Silver for 2010

Last post on Silver before 2011, the year of the Rabbit.

If you had a chance to read the Sprott report referenced in yesterdays post, you got to read an excellent a summary of the large short position held in Silver by JP Morgan and HSBC.

This week a Chicago law firm announced another class-action lawsuit against JP Morgan Chase & Co. and HSBC Holdings PLC for manipulating the silver market.

Despite mounting pressure, the attempts at manipulating both the gold and silver downward continue.

The precious metal markets have become almost comically predictable lately.

You have JP Morgan (with their massive buying of shorts to drive down price) squaring off against some very large buyers who step in and counter the downward manipulation with strong buying.

These two forces are the primary drivers of price right now and there is almost a predictable pattern to what goes on.

Lately JP Morgan raids the market twice daily between approximately 8:00am EST and 9:00am EST. Once that happens, the large buyers step in and buy the dips driving the price of silver back up.

Take Wednesday Dec 29th, 2010.

Silver was raided at precisely 8:20 EST, taking $0.11 out of the price in under a minute. As usual, they sat back and watched for five minutes and then struck again at 8:25am, taking out another $0.11 in about 30 seconds. Then the large buyers stepped in and silver rebounded.

Now for today, Dec. 30th, 2010.

Silver shot up to $30.93 on the overnight trading.

To the bankers, this is a horrid development. Left to it's own devices, silver will end the week, the month and the year over $30, the highest levels since the 1980s.

Many observers believe that this is something that the bankers will simply not allow. Thus everyone watched the markets keenly for a significant raid today.

We weren't disappointed.

Silver was driven down from $30.93 and suffered two significant raids (just like yesterday) at 8:26am EST and then again at 8:31am. Silver was ultimately driven down to #30.30.

That's when the strong buyers stepped in again.

This is unprecedented in the last 30 years. Normally such sharp drops in the silver price in that span of time scares off investors who fear the price will collapse. This is how the price has been so effectively controlled in the past.

But the market has changed. You have significant buying by extraordinarily strong buyers happening (rumoured to by China and Russia).

Instead of triggering a freefall in the silver price, buying starts up again and drives Silver back up.

At 9:45pm PST tonight, Silver was up to $30.75 again after having been driven down over 60 cents.

Amazing.

I will be watching with keen interest tomorrow morning for a significant attack on silver in a last ditch attempt to shake silver below the $30 level before the year ends.

After that, watch for silver to take a huge jump on Tuesday.

Why?

First, the markets will be closed on Monday because of New Year's Day.

That takes us to Tuesday.

An analyst I follow closely recently make a keen observation. After observing the metals markets for years, he noticed that weekly gains are often made early in the week and selling usually occurs later in the week. The pattern repeats so frequently that it was clear it was not coincidence.

He concluded that JP Morgan is trying to hide their malicious intent from the weekly Commitment of Traders report. This is a report on the market that comes out every Friday but it is based on the previous Tuesday. So, any new short positions initiated JP Morgan on a Wednesday will not show up on the CoT until the next Friday. Thus JP Morgan has until the next Tuesday to cover any brand new shorts they just initiated if their raids fail.

So every week, down go metals mid-late week on fresh paper-metal selling; up go metals early the following week if shenanigans fail, the shorts are covered before new CoT survey.

Tuesdays are almost regularly raid free days.

Last Tuesday, Silver was up over a $1 an ounce without interference. Likewise, Silver mining stocks also go up significantly on Tuesdays.

Therefore I would humbly suggest to you that the first trading day of the New Year on Tuesday will see a huge jump in the Silver price.

Let's see what happens, shall we?

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As always, the content on this site is provided as general information only and should not be taken as investment advice. All site content, including advertisements, shall not be construed as a recommendation to buy or sell any security or financial instrument, or to participate in any particular trading or investment strategy. The ideas expressed on this site are solely the opinions of the author(s) and do not necessarily represent the opinions of sponsors or firms affiliated with the author(s). The author may or may not have a position in any company or advertiser referenced above. Any action that you take as a result of information, analysis, or advertisement on this site is ultimately your responsibility. Consult your investment adviser before making any investment decisions.

The author(s) of the posts on this site are not investment advisors and they do not offer investment advice. They try to provide some hopefully useful data with sources - especially concerning real estate - and then add their own analysis.

All the content on this website is solely an expression of the author's personal interests and is posted as free-of-charge opinion and commentary. Nothing here is intended as investment advice. If you seek investment advice, consult a registered, qualified investment advisor.

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On the topic of Silver

This week I have talked about Quantitative Easing and how it can only continue. QE has triggered currency induced cost-push inflation.

Recognizing these trends are important. Understand what is going on around you and you can take advantage of it.

Quantitative Easing is having its expected effect. QE is debasing the purchasing power of the dollar. This has caused gold and silver metals prices to rise.

In 2011 this trend will continue.

And because of this I sincerely believe you should shun real estate and look to Silver as the best investment for your money, particularly if you are someone looking to buy into the real estate market for the first time... or if you are nearing retirement and looking to invest the proceeds from you bubble inflated housing asset.

If you haven't seen it before, I highly recommend you read Sprott Asset Management's Double-Barreled Silver Report

• "While gold dominates the headlines, the silver market actually enjoys a superior fundamental supply/demand story than that for gold."

Sprott explains the complete rational for this statement and it is worth checking out.

Some have speculated that they believe 2011 will see an economic retrenchment in the markets which will bring down gold and silver in the short term - repeating a situation like we saw in 2008. The stock market crashed and metals/commodities came down with it.

I don't think that will happen this time around. I believe, in 2011, we may well see another Lehman type event in the first half of 2011, but the effect will be quite different from 2008. You will see a strong demand for physical metals in preference to any paper substitutes.

Instead of a rush for liquidity and a flight to the safety of the US dollar, I believe the flight this time will be to the safety of physical metals.

I also believe, in the short term (meaning the next two and a half weeks), we are going to experience another strong upturn in the price of silver.

Since late August silver has moved up in stages. After an initial run from $19 to $23, silver had a pattern of sharp price increases, followed by three-week consolidations.

The latest peak was about three weeks ago so, history would suggest that we are about to rise again. I have been looking for this week or the first week of January for the next move.

So far this week silver is up over $1.50 and sits, as I write this, at a new high for 2010 of $30.85.

I see silver moving to $32.50- $33.00 with an outside chance of $34.00 over the next 2 weeks.

Let's see what happens.

As for those of you who worry silver and gold are in a bubble which is about to burst, I say: not a chance. Precious metals are a long ways from a bubble yet.

Ask yourself, how many of your co-workers talk about real estate?

Now... how many talk about silver or gold? How many even know the current price of silver or gold? Put it to the test... ask them tomorrow.

In the meantime, check out this youtube interview of Harvard students on how the current state of the economy has affected their lives. Most of the students were very optimistic on the economic future of their country.

Towards the end of the video, the interviewer offers all these Harvard brainiac's the chance to buy an ounce of silver for $5 (this was posted on youtube on December 14, 2010 when silver was at $29.50/oz).

Not ONE of them accepts and appear to disdain the idea of buying silver.

Bubble? Not by a long shot.

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As always, the content on this site is provided as general information only and should not be taken as investment advice. All site content, including advertisements, shall not be construed as a recommendation to buy or sell any security or financial instrument, or to participate in any particular trading or investment strategy. The ideas expressed on this site are solely the opinions of the author(s) and do not necessarily represent the opinions of sponsors or firms affiliated with the author(s). The author may or may not have a position in any company or advertiser referenced above. Any action that you take as a result of information, analysis, or advertisement on this site is ultimately your responsibility. Consult your investment adviser before making any investment decisions.

The author(s) of the posts on this site are not investment advisors and they do not offer investment advice. They try to provide some hopefully useful data with sources - especially concerning real estate - and then add their own analysis.

All the content on this website is solely an expression of the author's personal interests and is posted as free-of-charge opinion and commentary. Nothing here is intended as investment advice. If you seek investment advice, consult a registered, qualified investment advisor.

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QE... do the math.

Yesterday we talked about how the US Federal Reserve has to keep increasing the amount of Quantatative Easing (QE) it must pump into the American economy.

QE means only one thing: more US Debt.

And the numbers are getting stupid.

Should the current conditions persist, where will the United States be in 4 short years (2015)?

Usdebtclock.org is a fascinating little website that allows you to extrapolates future US debt at current rates of advancement.

The current US debt ceiling is approximately $14 trillion. That's the level at which goverment (supposedly) won't allow debt to pass. Mind you everytime they get close, goverment simply raises the ceiling and will do so again in spring of next year.

Small wonder.

If you thought $14 Trillion was bad in 2010, by the time 2015 rolls around the US national debt will hit $24.5 trillion.

Compounding that is the fact US Unfunded Liabilities are estimated at $144 trillion.

That, btw, is roughly $1.2 million for each and every American taxpayer.

These are numbers that cannot be ignored.

And when you consider how Washington fell into virtual gridlock earlier this month at the mere thought of ending the Bush tax cuts (and increasing government revenue to offset debt), there is no way you can even remotely believe government is going to be able to tackle the looming problem.

As you watch the travails of Greek and Irish bondholder, it is self evident that those problems will be nothing compared to what those unlucky enough to be in possession of US debt in 2015 will have to go through.

No one is going to wait for 2015 for the sh*t to hit the fan.

Moves are already going on behind the scenes to get out of US debt.

In fact some believe this is the real reason behind QE2. America had no choice but to monetize all debt issuance for 6 months because no one was willing to buy it.

This trend is going to intensify in 2011.

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On the topic of Quantitative Easing

Yesterday I talked about a trend that will continue next year: currency induced cost-push inflation.

Today I would like to talk about another trend you will see continue into next year: Quantitative Easing.

For almost 20 years now, the US Federal Reserve has been able to prevent market forces from correcting our economic imbalances by inexorably pushing rates lower.

This happened in 1991, 2001, and most notably in 2008.

These easing campaigns succeeded in boosting the economy in the short term by greatly increasing the amount of debt held by both the private and public sectors.

Each successful round was been enacted to prevent/delay the repercussions from the earlier effort.

The dot-com bubble was created. When it burst, rates were lowered to stimulate and created the housing bubble. When the housing bubble burst in the US, the Federal Reserve lowered interest rates to practically zero.

At this point, rates can go no lower.

So when that stimulus failed, the Federal Reserve has decided to bring on the heavy artillery in the form of “Quantitative Easing,” or as it is known in the vernacular, “printing money to buy government debt.”

By its own words, the Federal Reserve has said the goal of quantitative easing (QE) is to lower long-term interest rates. It is hoped that this will achieve what low short-term rates had not: an increase in stock and real estate prices, a rise in household wealth, and consequently greater consumer spending, economic growth, and job creation.

As the year winds down, it appears the Fed’s plan has backfired.

So far the selling pressure on long-term bonds is overwhelming the Fed’s buying pressure. Spiking rates (which move inversely to price) are powerful evidence that the bond bubble may be ready to burst. The Federal Reserve has thrown everything but the kitchen sink at the bond market to force yields lower, yet they have risen anyway.

Meanwhile the economy sputters, real estate continues it's downward slide in America and unemployment is not dropping.

Compounding the issue is a new Republican dominated congress which has come to power on the back of an austerity movement.

The US Federal Reserve is the only option to stimulate the economy right now.

One of the biggest obstacles facing that US economy will be the individual US States.

The worst recession since the 1930s has caused the steepest decline in state tax receipts on record. State tax collections, adjusted for inflation, are now 12% below pre-recession levels, while the need for state-funded services has not declined.

As a result, even after making very deep spending cuts over the last two years, states continue to face large budget gaps.

At least 46 states struggled to close shortfalls when adopting budgets for the current fiscal year. These came on top of the large shortfalls that 48 states faced in fiscal years 2009 and 2010. (for your information, the 2011 tax year began July 1 in most states)

States will continue to struggle to find the revenue needed to support critical public services for a number of years, threatening hundreds of thousands of jobs.

And if the State financial picture is bad, it pales in comparison to the municipal financial picture. Major American cities are in deep financial trouble.

There is no painless way out of this situation at this point.

Bernanke and the Federal Reserve are caught between the Scylla of deflation - which would liquidate the inefficient part of the economy - and the Charybdis of inflation.

A crystal ball is not required to see which the US Federal Reserve will choose in 2011.

Ben Bernanke has a PH.D in economics and his entire reputation is wrapped around be an expert on the Great Depression. He is an academic, and academics are very predictable.

When you go through graduate school you have to write a doctoral thesis, which will start your real career. Usually those thesis - if they are successful - lead to books and then more writings that branch off of the original thesis. Creative minds, and there is a difference between being imaginative and smart, then investigate new avenues of thought throughout their careers and come up with innovative theories and groundbreaking research.

That's what 'academic' life is all about.

Most of these 'academics' then spend the rest of their career circling around the theories behind their doctoral thesis. They remain anchored to it and don't deviate for the rest of their lives.

They can't.

Their entire professional reputation is wrapped around that thesis, it is their life's 'work'.

That is essence of Bernanke. He wrote a thesis claiming that the Great Depression happened because the Federal Reserve didn't lower interest rates fast enough after the stock market topped out in 1929 and because they failed to provide enough liquidity (printing of money) is the years after the crash.

There will be no deviation from this 'thesis'.

Bernanke has chosen the Charybdis of inflation - the whirlpool.

Quantitative Easing has only just begun.

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Happy Boxing Day

Before settling down for the holidays I pre-wrote this post and scheduled it for Boxing Day for you reading pleasure.

I hope every one's Christmas went well.

No doubt driving around to visit friends and family you took time to fill up your gas tank.

If you live in Greater Vancouver, your jolly spirit will have been tempered by gasoline prices which have touched north of $1.20 per litre ($1.22 at some stations).

Whoa!

Gas has gone back to the highs we experienced when oil was at over $140 per barrel, whereas right now oil is at $90 per barrel. What gives?

Even better, government statistics tell us that inflation has fallen to 1.3%.

Uh-huh.

In the inflation/deflation debate, you will see a great many analysts predict that inflation fears are a ways out. They argue that until debt deleveraging runs its course, and credit demand picks up, inflation will remain low. Until the velocity of money increases, we will we not see significant inflation.

I disagree.

Make no mistake... I agree that there is a significant amount of debt deleveraging still to occur.

But we will see these deflationary pressures coincide with inflation.

A blogger I follow articulated it best.

He noted that most folks only understand and recognize demand-pull inflation.

This is the classic demand side, Phillips Curve inflation, that says rising wages, employment and wealth cause economic expansion which leads to more money chasing a static amount of goods.

New, excess demand "pulls" prices up and the result is price inflation.

With deleveraging picking up steam, and credit continuing to contract, demand-pull inflation cannot take hold.

Pretty simple stuff.

But what we have been experiencing, and what will intensify in 2011, is a forgotten strain of the inflation beast called currency induced cost-push inflation.

This type of price inflation is caused by producers and merchants being forced to pass along through higher prices the rising cost of inputs to their products.

Consumers, particularly the lower-and-middle income ones, bear the brunt of the pain.

Your income isn't rising to keep pace with rising expenses and you get squeezed. Hard. And its not luxury items that are going up in price, its the staples. Bread, milk, gasoline, clothes, eggs, meat... the basics that no one can realistically live without.

Bloomberg reports beef prices increased 6.2% above last November, with steak prices up 5.4% and ground beef prices up 7.4%. Pork is up 12.9%. Poultry prices (including turkey) up 3.2%.

Egg prices increased 4.7%. Dairy 3.8%. Cheese 5.4%. Ice cream and related product prices 32.1%.

Cereal and bakery product prices are down 0.3%, but rapidly rising wheat futures mean prices can only be held in check for so long.

Meanwhile coffee, sugar, and wheat are up over 35%.

Consumers are going to be hit with sticker shock and 2011 is going to be a mean year.

Why will input costs go up?

Simple, they are all dollar-dominated and with US Federal Reserve now engaging in Quantitative Easing to infinity, all dollar-dominated assets are going up in price. Significantly.

That's why businesses like McDonalds are already letting consumers know they plan on raising prices next year. As noted by the Wall Street Journal:

• "Timing and executing price increases can be tricky as McDonald's and other companies are caught between paying more for key materials such as meat and wheat, and keeping prices low to attract price-sensitive customers in a still-weak economy."

Even that bastion of low prices, Wallmart, has been forced to hike prices. Inflation is raging in China and their costs are soaring. Wallmart simply cannot procur products at the same low wholesale costs.

So prices rise in North America while wages stagnate and deleveraging/credit contraction continues.

And it's nothing compared to what's coming.

Currency induced cost-push inflation has already arrived and is at work. Mark my words. In the midst of a tremendous amount of deleverageing, 2011/2012 is going to be a time of skyrocketing prices.

Pants, coats, groceries, gasoline, you name it.

Come next Christmas you will be wondering what hit you.

Good news though. The government will come out with Consumer Price Index stats that tell you inflation is only around 1%.

As I have posted before, the way government calculates inflation was changed in 2000. Everything that realistically affects the CPI has been stripped from the statistics.

Calculate inflation the way it was pre-2000 and inflation is raging at over 7%.

Take another look at those price changes above. Which statistic do you believe... inflation at 1% or inflation at 7%?

"Four legs good. Two legs better." Couldn't have said it better myself, George.

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Merry Christmas to all!

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T'was the night before Christmas...

One quick item before I settle in to enjoy the festivities.

Finance Minister Jim Flaherty has come out on this Christmas Eve to state his concern about the impact rising interest rates will have on Canadian family budgets in 2011.

Sense a trend here?

Sigh... allow me to retire to bedlam.

To all who come to this blog today I wish for you the happiest of holidays. Thank you for indulging my thoughts, my viewpoints, my ramblings.

Holiday cheer to all the realtors, bloggers and interested parties.

I enjoy the blog and I enjoy the emails/comments.

To those who so diligently send me links, thoughts and comments, it is appreciated.

Happy Christmas to all. And the best of the season to you and your families.

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A Festivus for the Rest of Us

Ahh the rush of the holidays.

Had planned to do an indepth post today on the silver issue but after spending the morning at the beach with my dog, I got bogged down all afternoon with several lengthy emails. Before I knew it... I had to get ready for tonight's Festivus party.

And in the spirit of Festivus, I have to say that the plethora of news articles generated by our Central Banks debt warnings are nothing short of a 'Festivus Miracle'.

It's no longer a case of 'bitter bloggers' who are crying 'chicken little' that the sky is falling... rather the whole issue now has an aura of legitimacy.

Of course, until a collapse happens... the idea that we are in a bubble simply will not be accepted, even with Mark Carney sounding the alarm about the dangers that lie ahead.

Look for an intense counter-offensive by the Real Estate Industry.

The first shot has already been fired by the likes of Helmut Pastrick, chief economist of Central 1 Credit Union, who said:

• “I don’t see a price bubble and I don’t see that we need the mortgage criteria tightened as is suggested in some quarters”

Somehow the winter doldrums of January/February aren't going to be as boring as in past years.

Let the airing of grievances begin.

Happy Festivus everyone!

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Update

Now back home. Will try and post tomorrow.

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In Transit

unable to post at this time. My apologies. Hope to be back ASAP.

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