Like sands through the hourglass these are the Saturday Open Threads of our lives.
19 comments:
Bean Counter
said...
I'm not an economist, so I throw this out to the more fiscally savvy of you.
Gold's recent explosion got me wondering about "real" money, true value, fiat currency and all those other buzz words. And because I am a stats dork I thought it would be fun to calculate the price of SA houses as they relate to gold - in short, figure out how many ounces of gold you needed to buy the average South African property since 1990.
The following figures are not decimal-place-accurate - I used averages, means, rounded up, rounded down, etc, etc, but none of those tweaks would change following figures by more than an ounce either way.
So, here goes: the number of ounces of the yellow stuff you needed to buy an average mid-sized South African house:
Stick those numbers in a graph, and two things leap out at you:
1. Prices went shot up from 2003 until 2005.
2. Houses have not been this cheap (in gold terms) for 20 years.
So, my question to you all? Is this a reflection that SA houses have already deflated a long way and are reaching some sort of "real" value, or is this just a symptom of a once-in-a-century bubble in the gold price?
I am glad you have come around to this way of thinking. I made a post about this a while back, I could have been using anonymous instead of Goldilocks at the time. No-one took me up on the discussion. I made another post about the Rand dropping 90% in purchasing power since the 90's, and houses unwittingly being a haven from near hyperinflation, no one said a word. Very perplexing.
The buzz words you mention are important. Think for a while on how you actually calculate value. Think about why you say oh that is expensive or cheap?
Is it not by comparisons of other things and based ultimately on the dollar price? What is the dollar price actually, how does it come about? That is something for everyone to have a good long noodle over.
On to real money:
Gold has always been money. It is 100% equity. Fiat money is 100% debt.
The bubble you are seeing is in paper, in debt, not in gold (read about the Fed dishing out 12.3 trillion $ worldwide, this is 12.3 trillion $ of debt). This is one of the reasons for the "high" gold price. It is paper being priced in gold.
I will add my first post on this below to add to this discussion.
Let’s have a little look at how good property is in gold terms, just for a different angle. I read an article a few months back by a well known estate agent who crowed about how certain houses had increased in value since the 70’s. The astute investor knows this is just inflation really, but hey? I ran the sums back then for investing in ounces of gold as opposed to buying the property to see what it looked like.
2 Harfield cottages 1972 – R24 000 Property – R4 000 000 Gold – R4 837 289 Average loss by purchasing property – R1789/month
Westerford Hotel 1973 – R285 000 Property – R15 000 000 Gold – R24 213 649 Average loss by purchasing property – R20 205/month
Bishopscourt Home 1978 – R35 000 Property – R12 000 000 Gold – R 2 051 480 Average gain by purchasing property – R21 257/month
Although gold was in the final mania phase of the bull market circa ‘78 and it wasn’t exactly the time to be entering the gold market, I still find a Bishopscourt home at R35000 in 78, as opposed to the Harfield cottages at R24000 in 72, 6 years before, a bit suspect.
However if correct, between political upheaval and a mania phase of gold it was obviously a great time to buy property in '78.
Which gets me to the conclusion. House prices now are reasonable value for those who have held gold or a similar store of value, not for those who have held paper.
The rand has lost 90% of its purchasing power in less than 20 years. Forget estate agents,supply and demand, speculators and house flippers etc, the disastrous monetary policies of the present government at the direction of the IMF created the property bubble.
Anon above does make a good point. Shouldn't we be comparing apples with apples? Gold prices are primarily determined by investors, whereas investors don't play much of a role in defining property prices. As it stands, most purchases of property are by people wanting to physically live in them, so by principle their buying power defines the price. It's an interesting subject, but the majority of income used to finance the repayment bonds on these properties, and ultimately determines affordability, is paper. Thus by association property should be compared to paper only. If we were to compare property to salt, there was a time when salt was worth a lot and property little. Today that's the exact opposite, yet we don't say that property is ridiculously overpriced because of it.
@ Bean Counter. Your statistical insights are food for thought as always. In this case though the 2005 peak in housing prices in gold and subsequent fall over the last 5 years corresponds more or less exactly to the start of the current bull market in gold. Gold price in USD is just going up faster than SA property is the only conclusion I can safely make from that data. Or, am I missing something? @ Goldilocks Re: you 1978 time to buy a house. Coincidently, my parents had our first family house built in 1978 in Murdock Valley South, Simon’s Town. Cul-de-sac, 3 bed, 2 bath, double garage, unbelievable views. Total cost for building and plot ZAR28 000. Sold it in 1999 for ZAR450 000.
You cannot compare paper to property. Paper or digital money is not a thing, it has no intrinsic value. It is a representation of value, a means of exchange.
You add value in your job, you get "paid" in paper as the representation of that value you added, and then exchange it for physical things of value like food, clothing or property.
What you are seeing is the fall in value of paper vs all physical things be they food, fuel, property, gold etc. Your wages or the value you add commands less paper every year, not keeping pace with what physical things are commanding.
I know this is difficult for people to get their heads around. Take a loaf of bread. It still takes the same amount of flour, yeast, water and salt to make it as 20 years ago, or a 1000 years for that matter. What happens when the price goes up? Has the bread changed or has the amount of paper it takes to buy it changed? It takes more and more paper to buy the same physical loaf. So it is paper that has changed and weakened, like Zimbabwe in slower motion.
Apply this thinking to property/gold and then your wages and you will see that there is an increasing confiscation every year of the value you are adding. This is being confiscated by inflation and is a stealth tax you do not see, but you definitely feel it.
This is all a direct result of government monetary policy directed by the IMF. Personally give me the genius of monetary policy here in 1967; the creation of the legal tender Krugerrand which is the worlds best selling bullion coin and copied by everyone including the US/Canada etc etc. The Financial Rand so that we do not have to endure people speculating in our currency like a casino and confiscating the common mans wealth.
The krugerrand is legal tender which means it can be used officially to pay all debts in SA. In this it is exactly the same as a paper rand. Originally the last government intended krugers to circulate with the normal rands, that is why they are 22 carat gold, a bit of copper added to harden it for daily use. There is a full oz of gold in a kruger, the extra weight is the copper.
You could actually force the teller at Pick and Pay to take the kruger but this would do more harm than good. It is better just to have an agreement with a seller to accept the krugers. Remember this is a new government fully in the pocket of the IMF and Modern Monetary Theory and they love paper as can be seen from the near hyperinflation we have experienced.
Krugers are legal tender but designated as foreign exchange, an unusual combination. You can redeem a kruger without ID at any branch of the Reserve Bank for its paper rand value of the spot price of gold in dollars. The US has a different system-They use a face value of 50$ for a 1oz gold coin; therefore it has a 50$ legal tender value for payment of debt but a 1oz gold spot foreign exchange value.
I havent had time but I would like to research the legality of the present government levying CGT on krugers, this is not what was intended and is just another way of draining the wealth from the people.
Yes, thanks. Very interesting. I just wonder if the property is around the R500K mark how they would calculate whether transfer duty (?) is applicable or not. (Considering there is about a R1000 difference in the prices for buying and selling krugerrands at outlets.)
Goldilocks, you seem to be quite knowledgeable about Krugerrands so let me ask you these two questions:
1. What would be the most cost-effective way to buy, say, R200K, worth of coins. Last time I checked, there is quite a significant premium at the retailers.
2. How can one make sure the stuff is not fake. One reads stories about gold index funds finding our they acquired fake gold so just the reputation/affiliation of the retailer does not cut it for me.
3. Would would be the best way to store the stuff? A deposit box in the bank is the best option I can think of.
@anon 1 Transfer duty would be applicable as it is still a purchase of the property. Paying a premium over spot covers cost and profit for the refinery and retailers. If krugers were used widely as legal tender as originally intended we would not pay the premium over spot, the government would pay minting costs to the Rand Refinery as they today pay the mint, essentially the RRefinery would be the mint, of krugers at least.
If this government had half a brain they would push the legal tender status of krugers and encourage us to hold them as savings and let the coins to circulate for large purchases such as property, this country would be far better off. They don’t have an inkling that following the IMF MMT and selling off our assets to sovereign wealth funds and corporations from the ME, China, US and everywhere else is just re-colonization. Look up a video on Youtube called Gold Dinar Silver Dirham.
anon 2 Gold is long term; do not be concerned about short term price action. It is a wealth asset and it is worth paying a premium to get out of paper. If you read my above posts you will see that if you hold paper you only hold claims on value (debt). When you buy physical things with paper only then have you realized the value and been paid. So I consider myself to be paid only when I convert my paper to gold, I spend what I need and the savings go into gold. With the world printing furiously from Europe to the US, China to the UK and SA, I feel safer in gold because I don’t have to stress about shares and stocks and inflation and maintaining purchasing power, it’s just simple and effective. When a Paul Volcker comes on the scene and raises interest rates to 20% like he did in ’80 in the US that’s when I will think twice on gold. For now with the Bernankes, Gordhans and Marcus’ of the world I stay well away from paper and gladly pay the premiums.
The best premium I think is at SA Bullion but they need to hold it for 3 years before you can take delivery, otherwise they undercut everyone else. They have storage at Rand Refinery, insured, 100% allocated, dual audit. Essentially you pay the same at a retailer, just upfront, such as Cape Gold Coin Exchange. If you don’t trust the retailer you can get the coins assayed for a fee. There are other avenues outside SA like Goldmoney.com etc. All krugerrands dealers are accredited and have to be to buy krugers from RRefinery, go with one of them.
The problem with the banking system is this: Neither paper nor gold earns interest in a shoebox. Depositing in a bank is a loan made to them, not a safe place for your money lol. Interest is a risk premium for loaning this money to the bank so it can use it as it sees fit. Gives one a new angle on fixed deposit and savings accounts no? There are stories about Swiss banks, some not all, who have sold their clients gold and invested the proceeds with the idea they will buy gold back at a later date to cover. All the while they charge storage fees and insurance. Personally I would keep my gold out of the banking system, doesn’t matter if it’s in an allocated account, unallocated or safety deposit. I don’t do ETFs either, it’s just paper gold. Physical gold and close to home is better or in a storage facility outside the banking system.
Transfer duty would still be applicable as it is still a purchase of the property with legal tender. Its as if you are paying with normal rands, no difference.
Paying a premium over spot covers cost and profit for the refinery and retailers. If krugers were used widely as legal tender as originally intended we would not pay the premium over spot, the government would pay minting costs to the Rand Refinery as they today pay the mint.
If this government had half a brain they would push the legal tender status of krugers and encourage us to hold them as savings and let the coins to circulate for large purchases such as property, this country would be far better off. They don’t have an inkling that following the IMF MMT and selling off our assets to sovereign wealth funds and corporations from the ME, China, US and everywhere else is just re-colonization. Look up a video on Youtube called Gold Dinar Silver Dirham.
Gold is long term; do not be concerned about short term price action. It is a wealth asset and it is worth paying a premium to get out of paper. If you read my above posts you will see that if you hold paper you only hold claims on value (debt). When you buy physical things with paper only then have you realized the value and been paid. So I consider myself to be paid only when I convert my paper to gold, I spend what I need and the savings go into gold. With the world printing furiously from Europe to the US, China to the UK and SA, I feel safer in gold because I don’t have to stress about shares and stocks and inflation and maintaining purchasing power, it’s just simple and effective. When a Paul Volcker comes on the scene and raises interest rates to 20% like he did in ’80 in the US that’s when I will think twice on gold. For now with the Bernankes, Gordhans and Marcus’ of the world I stay well away from paper and gladly pay the premiums.
The best premium I think is at SA Bullion but they need to hold it for 3 years before you can take delivery, otherwise they undercut everyone else. They have storage at Rand Refinery, insured, 100% allocated, dual audit. Essentially you pay the same at a retailer, just upfront, such as Cape Gold Coin Exchange. If you don’t trust the retailer you can get the coins assayed for a fee. There are other avenues outside SA like Goldmoney.com etc. All krugerrands dealers are accredited and have to be to buy krugers from RRefinery, go with one of them.
The problem with the banking system is this: Neither paper nor gold earns interest in a shoebox. Depositing in a bank is a loan made to them, not a safe place for your money lol. Interest is a risk premium for loaning this money to the bank so it can use it as it sees fit. Gives one a new angle on fixed deposit and savings accounts no? There are stories about Swiss banks, some not all, who have sold their clients gold and invested the proceeds with the idea they will buy gold back at a later date to cover. All the while they charge storage fees and insurance. Personally I would keep my gold out of the banking system, doesn’t matter if it’s in an allocated account, unallocated or safety deposit. I don’t do ETFs either, it’s just paper gold. Physical gold and close to home is better or in a storage facility outside the banking system.
Gold is long term; do not be concerned about short term price action. It is a wealth asset and it is worth paying a premium to get out of paper. If you read my above posts you will see that if you hold paper you only hold claims on value (debt). When you buy physical things with paper only then have you realized the value and been paid. So I consider myself to be paid only when I convert my paper to gold, I spend what I need and the savings go into gold. With the world printing furiously from Europe to the US, China to the UK and SA, I feel safer in gold because I don’t have to stress about shares and stocks and inflation and maintaining purchasing power, it’s just simple and effective. When a Paul Volcker comes on the scene and raises interest rates to 20% like he did in ’80 in the US that’s when I will think twice on gold. For now with the Bernankes, Gordhans and Marcus’ of the world I stay well away from paper and gladly pay the premiums.
The best premium I think is at SA Bullion but they need to hold it for 3 years before you can take delivery, otherwise they undercut everyone else. They have storage at Rand Refinery, insured, 100% allocated, dual audit. Essentially you pay the same at a retailer, just upfront, such as Cape Gold Coin Exchange. If you don’t trust the retailer you can get the coins assayed for a fee. There are other avenues outside SA like Goldmoney.com etc. All krugerrands dealers are accredited and have to be to buy krugers from RRefinery, go with one of them.
The problem with the banking system is this: Neither paper nor gold earns interest in a shoebox. Depositing in a bank is a loan made to them, not a safe place for your money lol. Interest is a risk premium for loaning this money to the bank so it can use it as it sees fit. Gives one a new angle on fixed deposit and savings accounts no? There are stories about Swiss banks, some not all, who have sold their clients gold and invested the proceeds with the idea they will buy gold back at a later date to cover. All the while they charge storage fees and insurance. Personally I would keep my gold out of the banking system, doesn’t matter if it’s in an allocated account, unallocated or safety deposit. I don’t do ETFs either, it’s just paper gold. Physical gold and close to home is better or in a storage facility outside the banking system.
Gold is long term; do not be concerned about short term price action. It is a wealth asset and it is worth paying a premium to get out of paper. If you read my above posts you will see that if you hold paper you only hold claims on value (debt). When you buy physical things with paper only then have you realized the value and been paid. So I consider myself to be paid only when I convert my paper to gold, I spend what I need and the savings go into gold. With the world printing furiously from Europe to the US, China to the UK and SA, I feel safer in gold because I don’t have to stress about shares and stocks and inflation and maintaining purchasing power, it’s just simple and effective. When a Paul Volcker comes on the scene and raises interest rates to 20% like he did in ’80 in the US that’s when I will think twice on gold. For now with the Bernankes, Gordhans and Marcus’ of the world I stay well away from paper and gladly pay the premiums.
The best premium I think is at SA Bullion but they need to hold it for 3 years before you can take delivery, otherwise they undercut everyone else. They have storage at Rand Refinery, insured, 100% allocated, dual audit. Essentially you pay the same at a retailer, just upfront, such as Cape Gold Coin Exchange. If you don’t trust the retailer you can get the coins assayed for a fee. There are other avenues outside SA like Goldmoney.com etc. All krugerrands dealers are accredited and have to be to buy krugers from RRefinery, go with one of them.
19 comments:
I'm not an economist, so I throw this out to the more fiscally savvy of you.
Gold's recent explosion got me wondering about "real" money, true value, fiat currency and all those other buzz words. And because I am a stats dork I thought it would be fun to calculate the price of SA houses as they relate to gold - in short, figure out how many ounces of gold you needed to buy the average South African property since 1990.
The following figures are not decimal-place-accurate - I used averages, means, rounded up, rounded down, etc, etc, but none of those tweaks would change following figures by more than an ounce either way.
So, here goes: the number of ounces of the yellow stuff you needed to buy an average mid-sized South African house:
1990: 111
1991: 136
1992: 147
1993: 112
1994: 119
1995: 119
1996: 119
1997: 143
1998: 129
1999: 127
2000: 146
2001: 135
2002: 110
2003: 146
2004: 222
2005: 231
2006: 196
2007: 164
2008: 140
2009: 109
2010: 97
Stick those numbers in a graph, and two things leap out at you:
1. Prices went shot up from 2003 until 2005.
2. Houses have not been this cheap (in gold terms) for 20 years.
So, my question to you all? Is this a reflection that SA houses have already deflated a long way and are reaching some sort of "real" value, or is this just a symptom of a once-in-a-century bubble in the gold price?
Beanie,
I am glad you have come around to this way of thinking. I made a post about this a while back, I could have been using anonymous instead of Goldilocks at the time. No-one took me up on the discussion. I made another post about the Rand dropping 90% in purchasing power since the 90's, and houses unwittingly being a haven from near hyperinflation, no one said a word. Very perplexing.
The buzz words you mention are important. Think for a while on how you actually calculate value. Think about why you say oh that is expensive or cheap?
Is it not by comparisons of other things and based ultimately on the dollar price? What is the dollar price actually, how does it come about? That is something for everyone to have a good long noodle over.
On to real money:
Gold has always been money. It is 100% equity. Fiat money is 100% debt.
The bubble you are seeing is in paper, in debt, not in gold (read about the Fed dishing out 12.3 trillion $ worldwide, this is 12.3 trillion $ of debt). This is one of the reasons for the "high" gold price. It is paper being priced in gold.
I will add my first post on this below to add to this discussion.
Let’s have a little look at how good property is in gold terms, just for a different angle. I read an article a few months back by a well known estate agent who crowed about how certain houses had increased in value since the 70’s. The astute investor knows this is just inflation really, but hey? I ran the sums back then for investing in ounces of gold as opposed to buying the property to see what it looked like.
2 Harfield cottages
1972 – R24 000
Property – R4 000 000
Gold – R4 837 289
Average loss by purchasing property – R1789/month
Westerford Hotel
1973 – R285 000
Property – R15 000 000
Gold – R24 213 649
Average loss by purchasing property – R20 205/month
Bishopscourt Home
1978 – R35 000
Property – R12 000 000
Gold – R 2 051 480
Average gain by purchasing property – R21 257/month
Although gold was in the final mania phase of the bull market circa ‘78 and it wasn’t exactly the time to be entering the gold market, I still find a Bishopscourt home at R35000 in 78, as opposed to the Harfield cottages at R24000 in 72, 6 years before, a bit suspect.
However if correct, between political upheaval and a mania phase of gold it was obviously a great time to buy property in '78.
Which gets me to the conclusion. House prices now are reasonable value for those who have held gold or a similar store of value, not for those who have held paper.
The rand has lost 90% of its purchasing power in less than 20 years. Forget estate agents,supply and demand, speculators and house flippers etc, the disastrous monetary policies of the present government at the direction of the IMF created the property bubble.
Unfortunately I don't get paid in gold so I don't think houses are super cheap at the moment.
Anon above does make a good point. Shouldn't we be comparing apples with apples? Gold prices are primarily determined by investors, whereas investors don't play much of a role in defining property prices. As it stands, most purchases of property are by people wanting to physically live in them, so by principle their buying power defines the price. It's an interesting subject, but the majority of income used to finance the repayment bonds on these properties, and ultimately determines affordability, is paper. Thus by association property should be compared to paper only. If we were to compare property to salt, there was a time when salt was worth a lot and property little. Today that's the exact opposite, yet we don't say that property is ridiculously overpriced because of it.
@ Bean Counter.
Your statistical insights are food for thought as always. In this case though the 2005 peak in housing prices in gold and subsequent fall over the last 5 years corresponds more or less exactly to the start of the current bull market in gold. Gold price in USD is just going up faster than SA property is the only conclusion I can safely make from that data. Or, am I missing something?
@ Goldilocks
Re: you 1978 time to buy a house. Coincidently, my parents had our first family house built in 1978 in Murdock Valley South, Simon’s Town. Cul-de-sac, 3 bed, 2 bath, double garage, unbelievable views. Total cost for building and plot ZAR28 000.
Sold it in 1999 for ZAR450 000.
Anon,
You cannot compare paper to property. Paper or digital money is not a thing, it has no intrinsic value. It is a representation of value, a means of exchange.
You add value in your job, you get "paid" in paper as the representation of that value you added, and then exchange it for physical things of value like food, clothing or property.
What you are seeing is the fall in value of paper vs all physical things be they food, fuel, property, gold etc. Your wages or the value you add commands less paper every year, not keeping pace with what physical things are commanding.
I know this is difficult for people to get their heads around. Take a loaf of bread. It still takes the same amount of flour, yeast, water and salt to make it as 20 years ago, or a 1000 years for that matter. What happens when the price goes up? Has the bread changed or has the amount of paper it takes to buy it changed? It takes more and more paper to buy the same physical loaf. So it is paper that has changed and weakened, like Zimbabwe in slower motion.
Apply this thinking to property/gold and then your wages and you will see that there is an increasing confiscation every year of the value you are adding. This is being confiscated by inflation and is a stealth tax you do not see, but you definitely feel it.
This is all a direct result of government monetary policy directed by the IMF. Personally give me the genius of monetary policy here in 1967; the creation of the legal tender Krugerrand which is the worlds best selling bullion coin and copied by everyone including the US/Canada etc etc. The Financial Rand so that we do not have to endure people speculating in our currency like a casino and confiscating the common mans wealth.
Makes sense Goldilocks, thanks for the insight. Certainly something worth noodling over a bit. Keep it coming.
Would it be legal to offer to pay for a house in Krugerrands? Could the government prevent the transaction even if the buyer and seller agreed?
@Anon,
The krugerrand is legal tender which means it can be used officially to pay all debts in SA. In this it is exactly the same as a paper rand. Originally the last government intended krugers to circulate with the normal rands, that is why they are 22 carat gold, a bit of copper added to harden it for daily use. There is a full oz of gold in a kruger, the extra weight is the copper.
You could actually force the teller at Pick and Pay to take the kruger but this would do more harm than good. It is better just to have an agreement with a seller to accept the krugers. Remember this is a new government fully in the pocket of the IMF and Modern Monetary Theory and they love paper as can be seen from the near hyperinflation we have experienced.
Krugers are legal tender but designated as foreign exchange, an unusual combination. You can redeem a kruger without ID at any branch of the Reserve Bank for its paper rand value of the spot price of gold in dollars. The US has a different system-They use a face value of 50$ for a 1oz gold coin; therefore it has a 50$ legal tender value for payment of debt but a 1oz gold spot foreign exchange value.
I havent had time but I would like to research the legality of the present government levying CGT on krugers, this is not what was intended and is just another way of draining the wealth from the people.
I hope that explains it.
Yes, thanks. Very interesting. I just wonder if the property is around the R500K mark how they would calculate whether transfer duty (?) is applicable or not. (Considering there is about a R1000 difference in the prices for buying and selling krugerrands at outlets.)
Goldilocks, you seem to be quite knowledgeable about Krugerrands so let me ask you these two questions:
1. What would be the most cost-effective way to buy, say, R200K, worth of coins. Last time I checked, there is quite a significant premium at the retailers.
2. How can one make sure the stuff is not fake. One reads stories about gold index funds finding our they acquired fake gold so just the reputation/affiliation of the retailer does not cut it for me.
3. Would would be the best way to store the stuff? A deposit box in the bank is the best option I can think of.
@anon 1
Transfer duty would be applicable as it is still a purchase of the property. Paying a premium over spot covers cost and profit for the refinery and retailers. If krugers were used widely as legal tender as originally intended we would not pay the premium over spot, the government would pay minting costs to the Rand Refinery as they today pay the mint, essentially the RRefinery would be the mint, of krugers at least.
If this government had half a brain they would push the legal tender status of krugers and encourage us to hold them as savings and let the coins to circulate for large purchases such as property, this country would be far better off. They don’t have an inkling that following the IMF MMT and selling off our assets to sovereign wealth funds and corporations from the ME, China, US and everywhere else is just re-colonization. Look up a video on Youtube called Gold Dinar Silver Dirham.
anon 2
Gold is long term; do not be concerned about short term price action. It is a wealth asset and it is worth paying a premium to get out of paper. If you read my above posts you will see that if you hold paper you only hold claims on value (debt). When you buy physical things with paper only then have you realized the value and been paid. So I consider myself to be paid only when I convert my paper to gold, I spend what I need and the savings go into gold. With the world printing furiously from Europe to the US, China to the UK and SA, I feel safer in gold because I don’t have to stress about shares and stocks and inflation and maintaining purchasing power, it’s just simple and effective. When a Paul Volcker comes on the scene and raises interest rates to 20% like he did in ’80 in the US that’s when I will think twice on gold. For now with the Bernankes, Gordhans and Marcus’ of the world I stay well away from paper and gladly pay the premiums.
The best premium I think is at SA Bullion but they need to hold it for 3 years before you can take delivery, otherwise they undercut everyone else. They have storage at Rand Refinery, insured, 100% allocated, dual audit. Essentially you pay the same at a retailer, just upfront, such as Cape Gold Coin Exchange. If you don’t trust the retailer you can get the coins assayed for a fee. There are other avenues outside SA like Goldmoney.com etc. All krugerrands dealers are accredited and have to be to buy krugers from RRefinery, go with one of them.
The problem with the banking system is this: Neither paper nor gold earns interest in a shoebox. Depositing in a bank is a loan made to them, not a safe place for your money lol. Interest is a risk premium for loaning this money to the bank so it can use it as it sees fit. Gives one a new angle on fixed deposit and savings accounts no? There are stories about Swiss banks, some not all, who have sold their clients gold and invested the proceeds with the idea they will buy gold back at a later date to cover. All the while they charge storage fees and insurance. Personally I would keep my gold out of the banking system, doesn’t matter if it’s in an allocated account, unallocated or safety deposit. I don’t do ETFs either, it’s just paper gold. Physical gold and close to home is better or in a storage facility outside the banking system.
@anon 1
Transfer duty would still be applicable as it is still a purchase of the property with legal tender. Its as if you are paying with normal rands, no difference.
Paying a premium over spot covers cost and profit for the refinery and retailers. If krugers were used widely as legal tender as originally intended we would not pay the premium over spot, the government would pay minting costs to the Rand Refinery as they today pay the mint.
If this government had half a brain they would push the legal tender status of krugers and encourage us to hold them as savings and let the coins to circulate for large purchases such as property, this country would be far better off. They don’t have an inkling that following the IMF MMT and selling off our assets to sovereign wealth funds and corporations from the ME, China, US and everywhere else is just re-colonization. Look up a video on Youtube called Gold Dinar Silver Dirham.
anon 2
Gold is long term; do not be concerned about short term price action. It is a wealth asset and it is worth paying a premium to get out of paper. If you read my above posts you will see that if you hold paper you only hold claims on value (debt). When you buy physical things with paper only then have you realized the value and been paid. So I consider myself to be paid only when I convert my paper to gold, I spend what I need and the savings go into gold. With the world printing furiously from Europe to the US, China to the UK and SA, I feel safer in gold because I don’t have to stress about shares and stocks and inflation and maintaining purchasing power, it’s just simple and effective. When a Paul Volcker comes on the scene and raises interest rates to 20% like he did in ’80 in the US that’s when I will think twice on gold. For now with the Bernankes, Gordhans and Marcus’ of the world I stay well away from paper and gladly pay the premiums.
The best premium I think is at SA Bullion but they need to hold it for 3 years before you can take delivery, otherwise they undercut everyone else. They have storage at Rand Refinery, insured, 100% allocated, dual audit. Essentially you pay the same at a retailer, just upfront, such as Cape Gold Coin Exchange. If you don’t trust the retailer you can get the coins assayed for a fee. There are other avenues outside SA like Goldmoney.com etc. All krugerrands dealers are accredited and have to be to buy krugers from RRefinery, go with one of them.
The problem with the banking system is this: Neither paper nor gold earns interest in a shoebox. Depositing in a bank is a loan made to them, not a safe place for your money lol. Interest is a risk premium for loaning this money to the bank so it can use it as it sees fit. Gives one a new angle on fixed deposit and savings accounts no? There are stories about Swiss banks, some not all, who have sold their clients gold and invested the proceeds with the idea they will buy gold back at a later date to cover. All the while they charge storage fees and insurance. Personally I would keep my gold out of the banking system, doesn’t matter if it’s in an allocated account, unallocated or safety deposit. I don’t do ETFs either, it’s just paper gold. Physical gold and close to home is better or in a storage facility outside the banking system.
anon 2
Gold is long term; do not be concerned about short term price action. It is a wealth asset and it is worth paying a premium to get out of paper. If you read my above posts you will see that if you hold paper you only hold claims on value (debt). When you buy physical things with paper only then have you realized the value and been paid. So I consider myself to be paid only when I convert my paper to gold, I spend what I need and the savings go into gold. With the world printing furiously from Europe to the US, China to the UK and SA, I feel safer in gold because I don’t have to stress about shares and stocks and inflation and maintaining purchasing power, it’s just simple and effective. When a Paul Volcker comes on the scene and raises interest rates to 20% like he did in ’80 in the US that’s when I will think twice on gold. For now with the Bernankes, Gordhans and Marcus’ of the world I stay well away from paper and gladly pay the premiums.
The best premium I think is at SA Bullion but they need to hold it for 3 years before you can take delivery, otherwise they undercut everyone else. They have storage at Rand Refinery, insured, 100% allocated, dual audit. Essentially you pay the same at a retailer, just upfront, such as Cape Gold Coin Exchange. If you don’t trust the retailer you can get the coins assayed for a fee. There are other avenues outside SA like Goldmoney.com etc. All krugerrands dealers are accredited and have to be to buy krugers from RRefinery, go with one of them.
@anon 2 continued
The problem with the banking system is this: Neither paper nor gold earns interest in a shoebox. Depositing in a bank is a loan made to them, not a safe place for your money lol. Interest is a risk premium for loaning this money to the bank so it can use it as it sees fit. Gives one a new angle on fixed deposit and savings accounts no? There are stories about Swiss banks, some not all, who have sold their clients gold and invested the proceeds with the idea they will buy gold back at a later date to cover. All the while they charge storage fees and insurance. Personally I would keep my gold out of the banking system, doesn’t matter if it’s in an allocated account, unallocated or safety deposit. I don’t do ETFs either, it’s just paper gold. Physical gold and close to home is better or in a storage facility outside the banking system.
hmm lost the first part of that post.
Gold is long term; do not be concerned about short term price action. It is a wealth asset and it is worth paying a premium to get out of paper. If you read my above posts you will see that if you hold paper you only hold claims on value (debt). When you buy physical things with paper only then have you realized the value and been paid. So I consider myself to be paid only when I convert my paper to gold, I spend what I need and the savings go into gold. With the world printing furiously from Europe to the US, China to the UK and SA, I feel safer in gold because I don’t have to stress about shares and stocks and inflation and maintaining purchasing power, it’s just simple and effective. When a Paul Volcker comes on the scene and raises interest rates to 20% like he did in ’80 in the US that’s when I will think twice on gold. For now with the Bernankes, Gordhans and Marcus’ of the world I stay well away from paper and gladly pay the premiums.
The best premium I think is at SA Bullion but they need to hold it for 3 years before you can take delivery, otherwise they undercut everyone else. They have storage at Rand Refinery, insured, 100% allocated, dual audit. Essentially you pay the same at a retailer, just upfront, such as Cape Gold Coin Exchange. If you don’t trust the retailer you can get the coins assayed for a fee. There are other avenues outside SA like Goldmoney.com etc. All krugerrands dealers are accredited and have to be to buy krugers from RRefinery, go with one of them.
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