The Real Estate/Mortgage Bust Will Kill The US And World Stock Markets
The deflationary real estate/mortgage bust will kill the US and most of the major world stock markets/economies, just as the inflationary real estate/mortgage boom fueled the US/world economic upcycle from 2002 through 2005 (kept us out of a depression after the stock market bubble burst in March 2000). The real estate/mortgage bust will also kill (is already killing) the precious metals sector, which entered (gold/HUI/XAU) a Wave 2 Cyclical Bear Market on 5-11-2006, see charts 1 and 2 at http://stockcharts.com/charts/gallery.html?$GOLD.
Gold is a hedge against/does well in inflationary economic cycles, such as occurred during the inflationary real estate/mortgage boom from 2002 through 2005, that was fueled by rock bottom interest rates and easy money lending practices. This is why gold prospered and experienced a Wave 1 Cyclical Bull Market from $254 in April 2001 until the cycle high at $730.40 on May 11, 2006.
The current deflationary economic cycle/bust, the US/world real estate/mortgage bust, is a major negative for the precious metals sector and for the world's major stock markets. The economic boom from 2002 through 2005 was largely fueled by the real estate/mortgage boom, which helped the US/world get through the huge post 2000 economic bust, after the stock market bubble burst in March 2000 in the US and elsewhere. It took a huge real estate/mortgage bubble to deal with the huge post March 2000 stock market bust. What bubble will help stave off the effects of the current huge bust???
I haven't seen a single gold writer who understands this, that the current huge deflationary economic bust is VERY BAD for gold. Some well known and other gold writers think the current US/world real estate/mortgage bust is a positive??? They constantly get excited by all the gloom and doom lately. In the near future they won't be so excited when their world collapses and gold falls below $500.
This New York Times article, http://www.nytimes.com/2007/08/12/business/12mortgage.html?_r=1&hp&oref=slogin, you will probably have to register (it's worth it), is very interesting reading. The mortgage crisis is a huge problem, bigger than most people realize. This article helps to get that point across "big time." Here are some snippets:
"Conventional mortgages cost less than they did a few weeks ago, thanks to a decline in Treasury bond rates. But jumbo mortgages, where they are available, cost much more. The difference has gone from less than a quarter of a percentage point to more than two-thirds of a percentage point.
Jumbo mortgages are most important in areas with high home prices, most notably on the East and West coasts. “In California, it has shut down the purchase market,” said Jeff Jaye, a mortgage broker in Northern California. “It has shut down the refi market.”
The problems with subprime mortgages erupted as home prices began to slip in some markets, making it harder to refinance mortgages. There were reports that a surprisingly large number of loans made in 2006 were going into default only months after the loans were made. "
We live in very interesting times. Wait till the baby boomers start to retire in the US and Social Security and Medicare (much bigger problem than even Social Security) cause humongous budget problems. I'm not a gloom and doomer, but, there are huge problems. Keeping ones head in the sand is no way to live. I also strongly believe that we are living in the greatest time of the history of man. Ciao.
....... http://www.JoeFRocks.com/ .
HUI NEM XAU
Gold is a hedge against/does well in inflationary economic cycles, such as occurred during the inflationary real estate/mortgage boom from 2002 through 2005, that was fueled by rock bottom interest rates and easy money lending practices. This is why gold prospered and experienced a Wave 1 Cyclical Bull Market from $254 in April 2001 until the cycle high at $730.40 on May 11, 2006.
The current deflationary economic cycle/bust, the US/world real estate/mortgage bust, is a major negative for the precious metals sector and for the world's major stock markets. The economic boom from 2002 through 2005 was largely fueled by the real estate/mortgage boom, which helped the US/world get through the huge post 2000 economic bust, after the stock market bubble burst in March 2000 in the US and elsewhere. It took a huge real estate/mortgage bubble to deal with the huge post March 2000 stock market bust. What bubble will help stave off the effects of the current huge bust???
I haven't seen a single gold writer who understands this, that the current huge deflationary economic bust is VERY BAD for gold. Some well known and other gold writers think the current US/world real estate/mortgage bust is a positive??? They constantly get excited by all the gloom and doom lately. In the near future they won't be so excited when their world collapses and gold falls below $500.
This New York Times article, http://www.nytimes.com/2007/08/12/business/12mortgage.html?_r=1&hp&oref=slogin, you will probably have to register (it's worth it), is very interesting reading. The mortgage crisis is a huge problem, bigger than most people realize. This article helps to get that point across "big time." Here are some snippets:
"Conventional mortgages cost less than they did a few weeks ago, thanks to a decline in Treasury bond rates. But jumbo mortgages, where they are available, cost much more. The difference has gone from less than a quarter of a percentage point to more than two-thirds of a percentage point.
Jumbo mortgages are most important in areas with high home prices, most notably on the East and West coasts. “In California, it has shut down the purchase market,” said Jeff Jaye, a mortgage broker in Northern California. “It has shut down the refi market.”
The problems with subprime mortgages erupted as home prices began to slip in some markets, making it harder to refinance mortgages. There were reports that a surprisingly large number of loans made in 2006 were going into default only months after the loans were made. "
We live in very interesting times. Wait till the baby boomers start to retire in the US and Social Security and Medicare (much bigger problem than even Social Security) cause humongous budget problems. I'm not a gloom and doomer, but, there are huge problems. Keeping ones head in the sand is no way to live. I also strongly believe that we are living in the greatest time of the history of man. Ciao.
....... http://www.JoeFRocks.com/ .
HUI NEM XAU
Labels: Gold, Gold Stocks, HUI, NEM, Silver, Silver Stocks, SPX, XAU
posted by Joe Ferrazzano at
11:36 AM
