In terms of value, we believe the real estate market still has further to fall.
Although we are through the first wave of “sub-prime” mortgage onslaughts one glance at the chart below demonstrates the oncoming second wave of mortgage resets around the corner:
Another huge amount of resets are on the way, but this time the majority of the mortgage resets are “option arms”:
What are Option Arms? Here is the definition from The Mortgage Professor:
It is an ARM [Adjustable rate Mortgage} on which the interest rate adjusts monthly and the payment adjusts annually, with borrowers offered options on how large a payment they will make. The options include interest-only, and a “minimum” payment that is usually less than the interest-only payment. The minimum payment option results in a growing loan balance, termed “negative amortization”.
Not only do we believe real estate will fall further in value here in the United States but in other real estate markets around the world, as many markets have been propped up by government stimulus projects and have yet to crash:
For those interested in real estate investing, as we certainly are, we believe the current name of the game is to buy and hold precious metals. We patiently await the ongoing over to undervalued swing in real estate market values and visa versa for precious metal values. It’s a steady game of stockpiling physical Gold and Silver and keeping a finger on the economic pulse of our communities, country, and the world.
The following excerpts are from Rich Dad’s Guide to Investing in Gold and Silver:
Today we find ourselves in a similar situation, only better. Real estate has become much more overvalued and silver has become extremely undervalued. Measured against silver, the median price, single-family home in the U.S. hit it’s peak in 2002, at a price of 38,123 ounces of silver, some two and half times higher than at the beginning of the last precious market in 1971.
When silver hit its peak of $52.80 in 1980, it was not rare. Today as we’ve already discussed in detail, identifiable above-ground silver stockpiles have been drawn down to a tiny fraction of their size in 1980.
Remember, in 1980 it only took 814 ounces of silver to purchase one home, and silver wasn’t rare then.
*If you believe Silver ETF’s actually hold the purported Silver inventories they claim.
When the gold and silver bull market explodes, the financial news will react just as it did in 1980, and the only thing you will hear about is gold and silver. At that time there will be market analysts all over the Internet, radio, and TV, proclaiming to everyone the greatest investment of all time – gold and silver! The rarity of silver will go from something that a small fraction of the world’s population knows about to something everyone is now an expert on.
After studying things like the tulip mania of 1637, the NASDAQ bubble of the 1990s, the history and the current fundamentals of gold and silver, and the history of financial cycles, it would not surprise me in the least to see less than 500 ounces of silver buy a median-priced, single family home sometime in the future.
The biggest mean reversion in history is knocking on our door. I can’t stress this enough. The good news is that everything always reverts to the mean. Whether the news is good or bad will depend on if you are invested in the correct asset class for the cycle you are currently in. Investors who are aware of this will have wealth knocking on their doors, whereas investors who are caught unaware may end up with collection agents knocking on theirs.
The point of all this is that with real estate so overvalued, and silver so undervalued, chances are that they will both overshoot to the opposite extreme, before reverting to the mean. What that means for you is that you now have a very rare chance to become very wealthy very quickly by simply taking advantage of economic cycles and the wealth transfer they create.
Silver’s Case for Real Estate is simple – buy and hold physical bullion.
As the upcoming swings in valuation should prove to be very precious indeed for those who act now.
If Mike continues to be proven correct, wealth awaits its transference to you.
Don’t miss this rare opportunity!
Physical Delivery • Stored in a 3rd Party Vault • Precious Metal IRA
