Close X Cookies are necessary for the proper functioning of 24hGold.com. By continuing your navigation on our website, you are accepting the use of cookies.
To learn more about cookies ...
EnglishFrench
In the same category

Real estate priced in gold

IMG Auteur
Published : November 13th, 2012
591 words - Reading time : 1 - 2 minutes
( 10 votes, 4.4/5 ) , 1 commentary
Print article
  Article Comments Comment this article Rating All Articles  
0
Send
1
comment
Our Newsletter...

 

 

 

 

Throughout history many fortunes have been made and lost in real estate. Luck has of course played a part in these outcomes, but the main reason for changing fortunes is the decisions that were made, whether good or bad. Often the bad decisions were made because of the misunderstanding of some basic elements needed to choose real estate wisely.

For example, returning from a business trip not too long ago I got into a conversation with the driver of a car that I had arranged to meet me at the airport and take me home. This gentleman was in his late 60s and in a very jovial mood because it turns out, he had just sold his house in the outskirts of London. Thus, he was now ready to retire and was excited about the prospect of moving to the southwest of England where he planned to buy a cottage to enjoy his retirement. But as it turns out, that wasn’t the only reason that made him happy.

He crowed about how well he had done on hisinvestment”. Apparently, he bought the house in 1964 for £3,100, and was now quite delighted by the £212,000 selling price it had achieved.

When I arrived home, I decided to see just how well he really did and grabbed my calculator. I recognised that £3,100 was a lot of money in terms of 1964 purchasing power, and was curious what £3,100 would presently buy in real terms after adjusting for inflation. So using gold as the base for my calculations, I determined that the cost of his house in 1964 was 248 ounces, which at the £985 per ounce exchange rate prevailing when he sold his house were worth £244,000.

In other words, he if bought gold in 1964 and simply held on to it, he would have had £32,000 more purchasing power than he did in 1964. Thus, in real terms his house was worth £32,000, or 31.5 ounces of gold less than what he paid for it.

So despite being delighted by how well he had done, all things considered, he did not make a very good “investment”. In fact, his investment lost money, and I am not even considering here the amount of money he spent for maintenance, upkeep, taxes and other running expenses. But here is another important point he missed completely.

He was not making an investment by buying his house. He was buying shelter. That is the principal use of any home, and it is what he enjoyed for nearly five decades. And the shelter his house still provides is the reason that he was able to sell his house to someone else.

I think this example shows how misguided mainstream thinking has become. The ever-inflating fiat currencies used worldwide have terribly distorted what should be a simple, straightforward decision making process and means for thereafter evaluating your decision, like whether to buy a house for the shelter it provides.

The economies of many countries today have been devastated by real estate speculation. Easy money policies of central planners encouraged bank lending that created an artificial boom, much of which was the result of real estate speculation. These excesses that distort and make more difficult the decision-making process inevitably need to be unwound as banks and borrowers reduce their leverage to bring their balance sheets back to normal levels, a process which has been underway now for a few years. To better understand this process, I always recommend using gold to assist in your decision making process.

 

 

<< Previous article
Rate : Average :4.4 (10 votes)
>> Next article
James Turk is the founder of the Free Gold Money Report and of GoldMoney.com. He is also the co-author of The Coming Collapse of the Dollar (www.dollarcollapse.com).
WebsiteSubscribe to his services
Latest comment posted for this article
Fine analyse de James Turk sur le match or contre immobilier. L'or s'en sort gagnant largement sur longue période. Je regardais récemment des vidéos sur la fusion froide une recherche dont les premières révélations ont eu lieu en 1989, il y a plus de 20  Read more
Roxan - 11/13/2012 at 1:35 PM GMT
Top articles
Latest Comments
Why we should abandon the State
28 Julovertheedge
What a gigantic pile of horse excrement. Cherry pick everything that has gone wrong. Completely discount the hard fact that the author and ...
Iran Agreement Boosts Peace, Def...
26 Julkeith95
How about the US invading Afghanistan in 2001, Iraq in 2003 ... leading to the current unrest in the middle east while supporting the 'Saudi's' ......
Take Possession of IRA Metals We...
24 Julericgolub
Internal Revenue Code 4975 language suggests that whether the gold is held directly by the IRA or by an IRA LLC (which is nonetheless still subject...
Gold Miners Nearing Rebound
24 Julsonora69
Silver has already made a 50 cent down and up round trip as of 3:30. This is happening on a Friday, with the stock markets failing to make an advan...
Why Pensions Are A (Big) Black Swan
25 JulS W.1
No (pensions) are not a black swan, which is totally random unforeseen event.
Iran Agreement Boosts Peace, Def...
23 Julsonora69-2
Doesn't anyone remember the Iran hostage crisis, when Iran held 52 American diplomats and citizens hostage for 444 days in 1979-1981. How about 198...
What Do Greece and Louisiana Hav...
23 Julovertheedge
"The US financial system isn’t any better. ... , Actual currency is just a little over $1.36 trillion. ..." And it is assumed that about h...
Why Are We Here?
23 Julovertheedge1
No "woe is me" here. Just another buying opportunity. Using leverage is not buying, it is borrowing. It ain't bought til it's paid off....
Most commented articlesFavoritesMore...
World PM Newsflow
ALL
GOLD
SILVER
PGM & DIAMONDS
OIL & GAS
OTHER METALS
Mining Company News
Taseko(Au-Cu-Mo)TKO.TO
and Soda Creek Indian Band Sign Participation and Cooperation Agreement
CA$ 0.66+11.86%Trend Power :
Corporate news
Tinka Resources(Ag)TK.V
commences 10,000 metre drill program at Ayawilca zinc project, announces new IP results & tar
CA$ 0.17+9.68%Trend Power :
Corporate news
Sandstorm Gold(Cu-Mo-Au)SSL.V
Files Early Warning Report
CA$ 3.15+4.65%Trend Power :
Corporate news
Crown PointCWV.V
Provides Operational Update and Announces Executive Change
CA$ 0.14+3.85%Trend Power :
Corporate news
Cardero Res.(Ag-Au-Cu)CDU.TO
Announces Acquisition of the Advanced Zonia Copper Oxide Project in Arizona
CA$ 0.01-50.00%Trend Power :
Corporate news
Vista Gold(Cu-Le-Zn)VGZ.TO
. Announces Receipt of an Additional A$5.9 Million Net Tax Refund Under the Australian Govern
CA$ 0.34-6.94%Trend Power :
Corporate news
First Majestic(Le-Zn-Au)FR.TO
announces friendly acquisition of Silvercrest Mines
CA$ 4.12+2.49%Trend Power :
Corporate news
Sterling Res.(Oil)SLG.V
Announces Appointment of Strategic Financial Adviser
CA$ 0.18+9.37%Trend Power :
Nominations
Polaris MineralsPLS.TO
Materials announces the opening of its aggregate terminal in the Port of Long Beach, Californ
CA$ 1.98-8.76%Trend Power :
Corporate news
Endeavour Financial(Ag-Au-Co)EDV.TO
Mining to release Q2 results on July 30, 2015
CA$ 0.48+3.19%Trend Power :
Corporate news
Comments closed
  All Favorites Best Rated  
Fine analyse de James Turk sur le match or contre immobilier. L'or s'en sort gagnant largement sur longue période.
Je regardais récemment des vidéos sur la fusion froide une recherche dont les premières révélations ont eu lieu en 1989, il y a plus de 20 ans. Et cette technologie serait sur le point d'aboutir grâce à un ingénieur italien. Il s'agit d'une découverte supérieure même à celle de l'électricité, puisqu'elle permettrait l' "économie de l'hydrogène". Avec 1 gramme de nickel vous produisez l'équivalent de 5 barils de pétrole (soit 159 x 5 = 795 l par gramme de nickel). Votre facture de chauffage pour une maison moyenne sera de 30€/an. La voiture électrique deviendra une réalité avec une autonomie supérieure à celles des automobiles à moteur fonctionnant au pétrole et un coût de carburant réellement dérisoire.
La fusion froide est une bombe à faire plonger le monde actuel dans une vraiment vieille antiquité. Les mp aussi seraient bien mal en point.