The smart money has been pouring in to one of three investements lately. New fuel technologies, precious metals and real estate. While we don’t knock any of them, some are riskier than others.
Of course we are a little bias on the subject as we concentrate on precious metals, but facts are facts and numbers always tell the truth.
Real estate, like gold and silver, is a tangible asset. One however can be lived in, while both can be borrowed against utilizing it’s inherent value. One arguement that is very justifiable is the fact that real estate can be cash flowed. I would agree, if there were not so many business’s shutting down, and citizens applying for unemployment putting RE speculators in a position of having to cover multiple mortgages.
Now, if you look back to the 80’s, albeit was a different economy, silver rose much faster and higher than real estate. According to the S&P/Case Shiller Home Price Index, residential single family homes had a median price of roughly $21,000.00 and silver was trading right around $1.40/TROZ. So you could have purchased an average house for just under fifteen thousand ounces of silver. Fast forward that situation nine years to 1980 and tell me which investor had a stronger financial position.
The house doubled in value, which is awesome! The same $21k home was now selling for over $40,000!! That investor was quite happy with his choice. The silver investor however began his generational wealth if used properly…that same 15k ounces of silver that had the value of roughly $21k in 1971 had increased to over $50 per TROZ by 1980.
15,000oz. x $50 = $750,000
$750,000 / $40,000 = 18.75
Even with the doubled value of a home, the silver investor was able to acquire 18 homes with his new silver value as opposed to just one had he chosen the route of real estate just nine years prior.
With that being said, depending on what your goals are, precious metals in the form of physical gold and silver seem to be the smarter investment. This last weeks housing report did nothing but justify what we’re saying on this topic. With housing numbers coming out even weaker, and another wave of foreclousres coming once the unemployments benefits run out, another drop in home values is inevitable.
Real estate will rise, just not right now, or anytime soon. Precious metals will. The more money we print, the lower our dollars value will go. The counter to that has always been higher prices for gold and silver. So take advantage of the profits that are happening already in the precious metal market and buy real estate with those profits later. Trying to ride real estate to profits right now is comparable to taking a horse pulled wagon cross country. Do yourself a favor and jump on a plane!