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20 Dec 2011
Right now, today, if you were asked how you want to invest your retirement account and you only had two choices–gold or real estate, which would you choose? Here’s a gold chart for 2011 up to December 20th. We have been bombarded for months now with “buy gold” commercials. The “buy gold” mantra has reached a feverish pitch in T.V. and print advertising, not to mention Internet ads. Gold dealers have been preaching the safety of gold and what a great investment it is. Even today, after gold has crashed as seen on this chart, many gold dealers want you to invest your money on the gold they are selling. Obviously, they earn a commission for gold sales, and obviously that is their primary motivation.
A number of financial advisers and other talking heads boasted today that gold is a great buy now that it has crashed. Their claim is that you can buy it now at a discount because it is going back up. Fascinating, because they were saying the same thing before it crashed at about $200 to $400 more per ounce. If you look at the two trend lines I drew on this gold chart, it is quite clear that the trend since September is downward. One fundamental rule one learns about investing is not to trade against the trend. One other thing investors learn is that by the time a stock or commodity is on the front page of all the financial magazines, it is too late to buy. By then it is at a market top. On November 9th I wrote an article suggesting that gold was headed downward. I wouldn’t hold my breath waiting for the price of gold to go back up anytime soon. It could, especially if Europe slides into the economic abyss, but why gamble? If you ask me where I would put my money, in gold or real estate, it would be real estate now.
I’m selling homes to retirees and investors in Sequim at prices that are incredibly low and not speculative. Many of these homes are selling at far less than the actual cost to replace the home today. In other words, many homes are selling for less than the cost of cheap property plus the cost of excavation, the installation of utilities, the cost of permits and building the home itself. The price of homes has no where to go but up. Unlike gold that has a lot of room to drop . . . and drop . . . and drop. I hope it doesn’t, but the point is real estate is a much safer investment today in my humble opinion.
What would you do? Invest in gold or real estate?
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Having a difficult time finding the right agent? Simplify your life! Choose Chuck Marunde. I did. [Name withheld by request]
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