Gold, crude oil and silver were all up sharply in overnight trading as the euro gained back ground against the dollar.
Precious metals were up across the board with gold up $27.25 to $1,639.00 and silver popping $1.17 to $30.16. Industrial metals were also up sharply in a sign global confidence in manufacturing may be increasing and grains and soft commodities were also higher.
While I do expect gold prices to recover, I’m not getting all gushy with optimism about the rest of the economy. Many pundits are making a big deal about the plunge in apartment vacancies as reason to get all atwitter about the housing market in 2012. While that will certainly drive rents higher and spur some building of multi-family homes, I don’t think it’s going to inspire all that many people to purchase homes.
Mortgage rates are already as artificially low as the Federal Reserve can manage without simply handing money out for free and yet mortgage applications remain stubbornly low. Buying a home isn’t any better deal now than it was five years ago and mortgage service companies are still being run by the same crooks with same dismal service.
Also to contend with are the number of foreclosures still in the pipeline, a backlog of roughly six years of inventory. Related to the foreclosures are the sheer number of former homeowners with a bankruptcy or foreclosure on their borrowing record. In the new atmosphere of tighter credit, those people are basically dead to the tighter credit markets for at least another four years.
Beyond all that is the generational perception that home ownership is no longer part of the American dream. Over the decades home ownership has gone from a really good deal for consumers to one of near constant irritation and expense, a brick-faced ATM for cities, counties, states, insurance companies and a grab bag of other entities all hurting for cash.
Meanwhile, the world has forgotten about Greece and the potential for financial disaster in Europe. That situation there has not gone away and still holds the possibility of sparking a meltdown of epic proportions that would ripple over to our shores and swamp a raft of new homeowners.
Not only do I think faith in the housing market recovery is overblown and we should all be preparing for another shock to the global economy. That means going defensive with cash and cash equivalent investments and keeping a percentage of your wealth in precious metals.
Chris Poindexter, Senior Writer, National Gold Group, Inc
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