Another Prediction!

[Commercial Dan]

Interesting time ahead forn Property Inestors, here are my predictions for 2011-12 and beyond:

-Property prices will remain flat for another 2-3 years, then take off as inflation kicks in, real prices might stay flat for a while but who cares when you are hedged by inflation and holding hard assets, I certainly don't!

-Bout of Defaltion which will last for 2-3 years; happening now!

-Japan could be the next nation to crumble, has massive debt and large corporations like Nippon Steel are relying on low interest rates to service its highly indebted levels; won't last forever! China could go as well, keep an eye on this one

-After another 3 years inflation will strike due to excessive printing by Bernanke and Central Banks around the world to get out of the deflationary environment that is upon us now; potential hyperinflation worst case scenario

-Every Property Investor should hold physical silver or gold to hedge their bets even more, might take 3+ years to really pay off but $US200 silver and $US3,000 gold is not out of the question

-The OCR here will stay flat for 2-3 years


Good luck everyone, accumulate slowely in good areas, stay away from apartments, terrible areas and small towns, as I said before the market went belly up in 2007 those would be the worst effected areas....I was right, but really it was obvious to a donkey that this would happen!

Also, STAY AWAY FROM 'GET RICH QUICK SCHEMES', IF THE PROMOTERS OF THESE SCHEMES REALLY KNEW WHAT THEY WERE DOING THEY WOULD BE USING THEIR METHODS THEMSELVES INSTEAD OF SELLING THEM TO THE DUMB!

[WGN ex-property manager]

-Every Property Investor should hold physical silver or gold to hedge their bets even more, might take 3+ years to really pay off but $US200 silver and $US3,000 gold is not out of the question

Agree with all apart from gold and silver.

If you're going to become a commodity speculator then specialise in that and become an expert. Don't dabble.

Gold should not be bought with debt (far too risky), and every leveraged property investor needs to treat every cash dollar spent as a dollar of debt not repayed (in other words all money is debt!)

Trading potentially lower debt for a commodity with no cashflow doesn't add up to me.

Goldbugs will of course disagree, but I'd argue they have enough education in the gold market to be lower risk gold "traders" rather than speculating gamblers.

Just my p.o.v.....

Commence rebuttals please

[67910241]

Good stuff CD

-Property prices will remain flat for another 2-3 years, then take off as inflation kicks in, real prices might stay flat for a while but who cares when you are hedged by inflation and holding hard assets, I certainly don't!

Very plausible, but it could last longer than that.

Japan could be the next nation to crumble

There are still worse basket-cases out there than Japan I reckon. Not to say they're not in a tight spot likely to get tighter.

China could go as well, keep an eye on this one

If China goes, forget about your flatline prices in NZ. Australia goes down 30-35% easy, Kiwi PM dives 20% give or take a few %. Actually it could be worse than that. No resource demand from Asia = death of both economies. Finally the real recession comes down under. Unemployment in Kiwi back up to 10%. And no jobs in Aussie to flee to.

What's more debatable however is not so much if but when China will "cool down". Might not happen in a few years, or a whole decade.

potential hyperinflation worst case scenario

Yes, high inflation, especially vs hard currencies (gold, silver, energy)

Every Property Investor should hold physical silver or gold to hedge their bets even more, might take 3+ years to really pay off but $US200 silver and $US3,000 gold is not out of the question.

Trying to extend there with at least 1/3 of my equity in hard currencies, long of course. Shame I can't find a good way to go long on physical oil except by proxy.

The OCR here will stay flat for 2-3 years

Or move up and down a bit.

Good luck everyone, accumulate slowly in good areas

Cheers CD.

Would happily look at the worst affected but still good pop growth areas in US next year or in 2012, but not down under until the prices levels are rectified to reflect real risk, be it through risk materialisation or otherwise.

[ChrisD]

So you think we're in a deflationary environment, but we should hold real estate, gold and silver because their prices are going to go up?

[67910241]

-Every Property Investor should hold physical silver or gold to hedge their bets even more, might take 3+ years to really pay off but $US200 silver and $US3,000 gold is not out of the question

Funny that you mention $3000/oz gold and $200/oz silver. That's, what, 15 in GSR? Silver hasn't really gone so far up since, what, the 16th century, and that was because the price of gold plummeted. You counting on depletion of silver?

[67910241]

So you think we're in a deflationary environment, but we should hold real estate, gold and silver because their prices are going to go up?

He buys RE for LT cashflow growth not S to M term cap growth.

Gold and silver going up due to quiet stagflation. Toilet paperisation of fiat money that is. Asia buying heaps of both well into the future to help get rid of some of their ginormous US$ reserves. US$ to lose its reserve currency status. Whoever exits it last will lose the most.

[Commercial Dan]

So you think we're in a deflationary environment, but we should hold real estate, gold and silver because their prices are going to go up?

Gold/silver will be fine in a deflationary market with a hedge from the $US. Hold for long term all hard assets, don't leverage to buy G/S, buy the physical stuff.

[Commercial Dan]

Funny that you mention $3000/oz gold and $200/oz silver. That's, what, 15 in GSR? Silver hasn't really gone so far up since, what, the 16th century, and that was because the price of gold plummeted. You counting on depletion of silver?

silver had a massive run in 1979-80, the world has not discovered any new silver in a while, used in cellphones, laptops, etc, must go up over medium-long term!

[67910241]

silver had a massive run in 1979-80

Ah, ok, good point - I found the one you're talking 'bout, looks like the GSR went below 15 in early 1980.

[eri]

http://en.wikipedia.org/wiki/Corner_the_market#1970s:_The_Hunt_brothers_and_the_silver_market

[PropertyReturns]

Japan could be the next nation to crumble, has massive debt and large corporations like Nippon Steel are relying on low interest rates to service its highly indebted levels; won't last forever! China could go as well, keep an eye on this one.

Include NZ in this list as well. Is also a basket case with high debt. Mostly debt is held privately but our government is now socialising it! Total debt is what is important, and it always has been debt that drives you under or holds you back. It limits your options.

[donna]

Great thread CD - well done!

It would be interesting to know how many businesses are currently insolvent in NZ - but still operating. Another flat year would surely wipe out a good chunk....and National will surely lose the election ....even with Labour having the weakest Leader it's probably ever had...and that may not be ideal for us (property investors).

cheers,

Donna

[Perry]

Mostly debt is held privately but our government is now socialising it!

Can you please explain how the
gov't is socialising private debt?
Public debt I can understand.
But private?

[One]

Bail outs when things go horribly wrong. SCF springs to mind.

[Perry]

Ahhh, right - I get it. Thanks.
But such outfits pay a premium
(to the gov't) for the deposit
guarantee thing, don't they?
.