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Buying Homes with Cash… Gold Edges Closer to Currency Status

Commodities / Gold and Silver 2011 Feb 13, 2011 - 06:11 PM GMT

By: Investment_U

Commodities

Steve McDonald writes: Despite the gloomy housing numbers, many of the hardest hit areas in the real estate crash are seeing big new buying activity.

And not only that, it’s happening in cash.


Buyers in markets across the United States are snapping up homes in all-cash deals, betting that prices are at or near bottom.

According to the National Association of Realtors, 28% of U.S. home sales were all-cash transactions last year. By comparison, the rate was just 14% in October 2008, in addition…

•Cash buyers represented more than half of all transactions in the Miami-Fort Lauderdale area last year, according to Zillow.com. By comparison, they represented just 13% of all deals in the fourth quarter of 2006.
•The percentage of buyers in Phoenix paying cash hit 42% in 2010, more than triple the rate in 2008, according to Raymond James’s equity research division.
What motivates these buyers? In short, irresistible prices – and cash buyers can often command 5% to 10% more off the asking price than a buyer using a mortgage.

The Next New Global Currency: Gold

In a really big announcement this week, Morgan Stanley (NYSE: MS) started accepting gold as collateral. How big?

Well, in the past, only bonds and stocks were allowed as collateral, so moving gold into this realm is seen as a major move toward gold being accepted as a true currency alternative.

The Slap in the Face Award

The award this week goes to Irving Picard.

Who’s Irving Picard? He’s the court-appointed trustee who’s trying to recover losses from the Bernie Madoff Ponzi scheme.

He’s prosecuting the owners of the New York Mets baseball team to recoup $1 billion. Why? Because it seems the Mets owners actually made money while Madoff was running his operation and, according to Picard, the Mets didn’t do enough due diligence and should have known that Madoff was running a Ponzi scheme.

I’m sorry… but the entire Justice Department and the SEC couldn’t see the scheme, but an investor – no matter how large – is supposed to have figured it out for them?

That’s weird enough, but the real slap in the face comes when you read the indictment and realize that most of the evidence (if you can call it that) against the Mets owners is based on a money manager that the Mets owners shunned because he wasn’t getting the returns that Madoff was.

The really unbelievable part of this story is that Picard will probably win at least a partial settlement from these folks.

Unbelievable! Investors are now supposed to fulfill the SEC’s enforcement responsibilities, or we have to give up our returns.

That’s it. Catch you again next week.

Steve McDonald

Editor’s Note: Each week, Steve McDonald reports on the most important economic and market developments, showing investors how to profit from the trends. You may have read some of his previous posts on the site this week.

But always a willing entertainer, Steve also takes time to head to our subterranean recording studio to tape these weekly updates for you. And you can find this week’s Investment U Weekend Update right here.

Source: http://www.investmentu.com/2011/February/gold-edges-toward-currency-status.html

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Disclaimer: Investment U Disclaimer: Nothing published by Investment U should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investment advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication or 72 hours after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Investment U should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

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Comments


14 Feb 11, 04:30
Sue the SEC

Why doesn't he just sue the SEC, that would make a lot more sense. The SEC just plain ignored the evidence given to them years ago. They should pay the bill. For years the SEC has been the joke of Wall Street, it seems that the only people working there are losers who can't get a job anywhere else on the Street.


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