EXCLUSIVE: How the super-rich scramble for 5-star property, and siphon off the gold output

Safe houses and raw gold are being snaffled up by the 3%

I read this kind of analysis four or five times already today:

‘…gold will head towards $1,700 an ounce or higher as central bank moves into purchase and production problems increase the demand for gold, analysts said…’

As we’ll see, those ‘production problems’ are not all they seem.

Yes – these are factors about the resurgent gold price, no doubt about it. Also a third factor is folks gambling on the alleged certainty of QE3…although the logic behind the gamble continues to elude me: QE means messing with the Dollar and thus compromising its value, but rather more directly it leads to higher stock market dividends and consequently reduced interest in gold as a stock market hedge.

However, none of that explains the overall sentiment for alternatives to cash, stocks and commodities in the context of falling global confidence in fiat currencies per se.

The Spanish bank run is the start of the accelerator against the euro, but when any currency is withdrawn, do people just stick it under the mattress? Peasants do, but the sleazy elite doesn’t.

The growing appetite for glitzy bricks

Here’s some fascinating news about top-end property prices in Five-Star locations: there is a rush to buy. In France, for example, while anything up to €550,000 simply isn’t selling, stuff in the €950,000-€3million band over the last three weeks has been flying off the agency shelves. So-called ‘known’ or ‘famous’ locations have been reporting a rush since the middle of August at the top end: it doesn’t matter whether it’s Nice on the /cote D’Azure or Issigeac in the Dordogne, the money is pouring in – at over 80% cash levels, and not for occupation, but for investment.

A similar syndrome has been under way in central London, as well as top-end Los Angeles, the West Indies, Singapore, Zurich and Vienna. But it is especially marked in ‘Raj’ Manhattan. As Shaun Osher, the chief executive of CORE says, “A lot of high-end buyers and sellers want to get on the gilded bandwagon.” Before long these may be more crowded than the last helicopter out of Saigon in 1973.

A new handful of properties in Manhattan are about to come on the market with listing prices of $90 million or more, And the wrinklies are partying in upmarket Miami neighbourhoods: apartments and single-family homes in and around Miami Beach are being listed and sold for record numbers…but again, very often not for occupation – more for ROI and a stable asset.

If the euro’s catatonic response to the liquidity emergency stays that way, other bank runs will begin….and currencies outside the eurozone must follow: banks will empty at record rates, and the property rush will become a stampede.

But very little of this is about swanky postcodes: the magic 3% with megamoney to spend are concerned to protect. They’re heading for places likely to keep both the value and the law and order.

The Coming Gold Rush

The one thing still holding gold back as a sector is the rapidly rising awareness – now well beyond blogosphere accusers like me – that the gold price is a fix designed to do all sorts of things. Things that can be summarised as ‘stopping the escape from all things prone to derivatives, zero demand, and exponential plunges’.

But there are signs that this inhibition is about to be cast to the four winds….above the sound of which can be heard the approach of the Four Horsemen of the Apocalypse. “No, it’s some guy arsing about with empty coconuts” isn’t going to suffice for much longer as an explanation. The smell of doom-dung approacheth.

As long as QE is on the horizon – and Ben, Merv and Mario are weighing up the pros and cons – gold will wobble up unreliably from one plateau and small drop to another. But then – as and when the bank-emptying takes off and the property options run out – the shiny metal will break out once and for all.

Off the radar, it already has. I posted towards the end of last year about how lots of gold-trade middle-men are being cut out by wealthy investment combines and  Arabian/Asian Sovereigns and their advisers approaching the miners direct. They offer the producers mouth-watering deals: have the cash now, set aside the gold for us in (say) six months time…have the money interest-free. Just sign here saying come what may, you’ll give us the gold.

Now I’m being told that the mining ‘production problems’ are not all they seem: that unrecorded output is being syphoned off direct to those off-the-record purchasers. Thus does yet another investment move I made (buying mining shares) fall victim to The Big Fix put in by The Big Money.

I’ve been out of that for some time now. I sold my last Gold Tracker at the $1872 level last year…a profit in excess of 120%. Now it’s back at $1690 in New York. As top-end bricks and mortar are way out of my league these days, I’m tempted by the amber gamble again.

My thought is to wait for the next euro-fudge and QE confirmation, hope for a smallish price fall, and then buy gold again….the real stuff this time. Commonsense says there will be millions of squeezed middles thinking exactly the same as me. I can but hope.

But like I opined at the start of this piece, the sense one gets researching, listening, asking, watching and monitoring today is that the flight from fiat money has just let go of it’s last booster stage. The escape-speed for these alternative investments is yet to be ascertained: but with stocks and commodities (outside some crops) looking sick, it seems clear that we are off to the Moon.

New Exclusive today at The Slog: Newscorp’s friend Jeremy Hunt gets a new job – but still has old baggage: drugs, illegal surveillance and paedophilia allegations against the club run by his main sponsor John Lewis OBE

100 thoughts on “EXCLUSIVE: How the super-rich scramble for 5-star property, and siphon off the gold output

  1. It begs the question that when these high end properties are sold how many will be paying Capitol Gains Tax. No doubt everything is offshore!

  2. Hollande must be rubbing his greasy little socialist mitts together in anticipiation of all that tax he is going to collect!
    Isn’t it the second property investment vehicle that he is intending to tax to high heaven?

  3. What people aren’t seeing is gold priced in Euros and is currently only 2.1% off it’s all time high sitting currently at Euros 1345. A breakout to new highs on the Euro chart will probably go un-noticed by most but it’s arguably more significant than the US$ priced chart because the Eurozone has a significantly larger GDP than the USA and represents a much larger population.

  4. John: history -last chopper out of Saigon late April (30th I think) 1975. I knew the Dutchman who took the iconic photo of the choppers leaving the Embassy roof (in fact it was CIA HQ across the road). He died about 4 years ago and only received about $500 for the photo because he foolishly gave the rights to an agency who resold them for six figures.

    What a waste that war was. Saigon is as good, nay even better, today was when the frogs were notionally in charge.

    • Your correction is right, it was April 30th, 1975. Celebrated as Reunification Day in Vietnam and conveniently May Day, the next day, is a Vietnamese holiday also.

      I love Vietnam, it is so sweet here now…

  5. I suppose that’s why the buy to let market seems to be doing well in the UK. Could be worth buying up a few flats?
    Or is the UK lower-priced property market likely to fall further?

  6. For my money – and considerable research – silver is a better bet than gold. One reason to support my argument is that half (or some say more) of all silver mined is used by industry and is vital to many current technologies. There is also a global shortage plus the fact that it is very expensive, not only to dig out the ground, but to extract from the holding rock. Even at today’s $32 spot price, it is still cheap. This price will follow gold – just check the daily and historic charts at kitco.com – and may well drop marginally in the next few days when Blythe Masters and co get back to their New York trading desk tomorrow. The spot price has flatlined all day today….very unusual. So we know that lovely horse riding Kent girl is in a different saddle today.

  7. ‘Safe houses ,raw gold’ neatly sums up the way not to become rich,rather than your investment choice at being silly enough to pay £6,500 per sf for your loo in 1Hyde Park,a glorified low ceiling council house block overlooking the Park,as the Candy boys get even more desparate. Gold?The post Afghanistan Russian invasion price in 1980 was$ 1000.Fear and greed still rules the dividend paying equity markets,which conveniently has a liquid options market.I recommend waiting for the market ‘adjustment’,and then writing puts in the usual drugs and oil monopolies.Timing?All in the hands of Barroso,Monti,van Rompuy,and the GS insiders.My guess is the day that Sussex fail to win the Championship.

    • Housing is a necessary liability if you live in it..
      Otherwise its just a liability with no control over property taxes,
      CGT or a wealth tax that’s coming on both sides of the pond.
      The Govt.’s will steal whatever the banks do not..
      Physical PM’s,outside the banks, is the only safe haven in
      the coming paper inferno.
      .

    • Sensible diversification in real things is the name of the game. Gold, equities and property all have a part to play unlike certificates og guaranteed confiscation issued by indebted sovereigns.

    • haha! I agree on all you’re points

      I think the miners are the best way to play the upcomming gold rush – providing you already have a good position in the bullion

      My shares in endeavour silver had a 9.3% pop on friday…very nice…SLW also flying, plus it pays a dividend

  8. John – so what does this mean for the average man on the street? My guess is……….not very much. People adapt and survive. You choose how you feel about people buying up high end properties and gold. You can choose how you feel about anything – just read Viktor Frankl’s book.

  9. Accoring to the Daily Telewag:
    ‘Veteran US investor Jim Rogers believes the US Fed has already launched a third round of quantitative easing, despite chairman Ben Bernanke failing to mention stimulus measures in Jackson Hole last week.’ It’s the Fed’s new secret plan and clever tricks dept. …don’t tell anyone we are printing. Cunning eh?

  10. Pingback: John Ward – Exclusive : How The Super-Rich Scramble For 5-Star Property, And Siphon Off The Gold Output – 3 September 2012 | Lucas 2012 Infos

  11. People who don’t want to pay the VAT rate at 20% for silver bullion coins can go to Germany and buy them at 7% Purchase tax. You used to be able to get them in Holland at 6% purchase tax but that ended at the beginning of 2011.

    Under EU law you cannot be re-taxed on personal purchases as long as you keep the receipt. Transactions below the value of €11,000 do not need ID. You can have a receipt which states “cash sale” and that will pass.

    Bars are full rate because they are classed as a commodity. Buy bullion coins which come in waterproof and airtight plastic containers. These are in 20’s for SAEs and Austrian Philos and 25 packs for Canadian maples (Which are 999 pure and I personally stack them).

    Perth Mint do a Cook island bar that’s classed as a coin in 1 kilo and 100 Troy ounce form. It’s legal tender in the Cook Islands and taxed as a coin if you buy them in Europe.

    I hope this helps. Leaving your money in any sort of bank is a very bad idea.

  12. So when are all you old boys thinking of cashing in your ‘capital gains’ on gold & silver? There must come a time soon when you crave a bit of income??
    Also you must wonder surely, who is going to be around to buy your gold at $xx,xxx per oz when this crash comes? Possibly there is dillusion at play here!!
    Personally, and to my current demise, I am a believer in Industrial Property – ok ok I know it’s down by 50% since 2007, but don’t you think that represents a GREAT opportunity in this hyperflationery environment you describe? And what is more there is income, just a small matter I know but one has to live and enjoy life, albeit ‘flugal’ is best.
    But here is a glaring oppotunity to make real money and all you guys can talk about is gold silver gold silver and on & on. One day you’ll all wake up and realize you’ve been had – hahahaha, Oh dear!!!

    • Hyperinflation is not the only possibility, but let’s go with that scenario. They key thing, in my opinion, in that scenario is to have things that people need. Food, water, fuel etc. Beyond bartering the only money acceptable will be the PMs – preferably British gold and silver coins that people recognise. Without money you will be very vulnerable. After the currency collapse you can convert the PMs into the new paper and then buy property at basement prices. So they play a duel role of survival through the upheaval and preserving your wealth when the reset happens. They give the flexibility that property cannot give.

    • What ever you’re smoking,I suggest you start selling that,
      rather than rely on industrial property,excepting maybe in
      China or Africa.

  13. You cannot be cute with your timing when it comes to buying silver or gold. You have to trust your instincts and just do it. (yesterday)
    There is no telling how many games will be played by Blythe Masters and the heavies at the bullion markets between now and the day their manipulation can’t hold precious metals down any more..
    The Chinese and the Indians have already abandoned the dollar. They are taking physical gold, Iranian oil and all the mineral wealth of Africa instead. Trust them, not the western media and their sycophantic and obtuse reporting of what is really going on. Buy your gold and silver now (physical as the man says), and ignore all am/pm fixes for the next two years. Gonna be a rocky road. The long view is all you should care about.
    It took a huge effort by them to put the brakes on gold at $1,900/oz a year ago, and they couldn’t hold it under $1,600 for more than a few weeks at a time; they are just about down to a few rounds of ammo now.

    The battle going on is to specifically lower YOUR standard of living. The 1% expect to ensure that it isn’t them who will lose, or be affected by inflation, or higher taxes. The money-printing has worked in their favour so far, it hasn’t reached the rest of us; the evaporation of bank deposits of the wealthy from Ireland, Greece, Spain, Italy to safe havens in London or NYC bricks and mortar has been tolerated if not downright encouraged, to the extent that when the Euro finally goes kaput, the top few % will be clear and free.
    For the rest of us, we won’t be allowed to borrow anything for investment, so the only game we will be allowed to play is to protect what savings we have.
    If you are too scared of gold, buy Swiss francs. They have had to align with the grubby euro to safeguard their exports (well they didn’t have to, but swiss bankers have no imagination), but will jump to side with Germany as soon as the new deutchmark is born and their currency will be fat and healthy again.

  14. So, a number of possibilities here. Why would those ‘in the know’ let others in on their secret?

    Perhaps because:

    1) I love you all and just want everyone else to benefit from my wisdom, or
    2) I’ve already made my money from it, now’s your chance before the door shuts. It’ll cost me nothing as it is now riskyor
    3) This is only profitable for me if you all climb into it as well, or
    4) Boy am I clever, but I need you to know that, or
    5) Perm any 3 from 4.

    Ten years ago I would have known the answer, today on a largely anonymous web, the phrase ‘let the buyer beware’ keeps popping up.

    No offence to those seeking the approval of their tactics as reassurance in trying times.

  15. The demand for UK property is so strong. Nothing gonna change for 10 yrs even if they loosen up supply. Plenty of houses below rebuild cost out there (north). Fat yields of 12-18%. Helps if you are fit and practical so you can manage the houses yourself.

    I mean for those of you who have £170k sitting around doing nothing. You could buy 3 houses and renovate them and have an income gross of £24k per yr. How many pensioners have spent a lifetime saving up a £170k pension pot to get a payout of £7000.

    The gold thing i just cannot get my head round it and as to industrial property, well you have to pay high taxes when empty and there sems to be an over supply of the stuff. Lots of business parks going up and so freeing up the old / expensive to run brick/stone buildings. Can these be turned into housing though ?

  16. Quality real estate in internationally sought after locations is a safe haven – eg: parts of Central London, New York, Paris, etc. The “desirable vacation locations” market is problematic unless you can guarantee that local law enforcement can and will maintain public order under all forseeable conditions. Monaco, parts of the South Of France – probably. The area around Lake Como? Maybe.

    Your best guide to what is coming is history – Eighteenth – Nineteenth century history. Those who had assets to protect owned a fortress – like city house and a walled country estate and they were staffed accordingly for security purposes (Gamekeepers, etc.). When the owners moved from estate to estate they had a security escort.

    The modern day equivalent is the secure Knightsbridge apartment, armoured Four Wheel drive, siesmic sensors around your country place, the panic room, and of course the nice young ex SAS men from Control Risk.

    For the rest of us, it is going to be a constant battle against crime as those at the bottom of the pecking order have no alternative but theft and robbery. If any of you have ever been to Port Moresby in New Guinea, you will know exactly what I mean. Plenty of job openings for security guards is the only upside.

    I think you can expect that Mr. Cameron will shortly change (“clarify”) the law to allow home owners to use deadly force to protect what is theirs because there will be more incidents like this:

    http://www.telegraph.co.uk/news/uknews/crime/9516776/Farm-tenant-arrested-after-burglars-shot-was-plagued-by-break-ins.html

    Personally, my guess is that there is safety in numbers and that your best bet will be to live in a tightly held town or regional centre – preferably in a secure geographic location (ie: In Britain or Europe – a location that has been occupied and fortified for a Thousand years) preferably with its fortifications mostly intact.

    To put that another way, the suburbs are going to be a wasteland and the freeways will team with robbers. We will have to go back to simpler ways and customs – including hanging thieves at the crossroads.

  17. Regarding Gold. My economics professor was chief economic adviser to the Government at the time Russia invaded Afghanistan. Cabinet asked for his advice regarding the economic consequences if America decided to intervene.

    He answered that question with a question: “What are our gold reserves and where are they?” If TSHTF there will only be ONE international currency – gold.

  18. Just for information. There is no vat on gold purchases only on silver purchases. Also British coins, such as; (£5) Quintuple Sovereign, (£2) double Sovereign, (£1) Sovereign, (50p) half Sovereign, (20p) quarter Sovereign and silver Britannia, are all legal tender coins and as a result are CGT free as the law stands.

  19. “Fiat” disambiguation due to subjective foundation of ‘value':
    “Fiat” (pre-apocalypse): currency with no intrinsic value; value derives from common acceptance/trust in the issuing authority.
    “Fiat” (post-apocalypse): from Latin..”Let it be done.” e.g.’Give me your gold or I will shoot you.’ Trust in the issuing authority derives from AK45.

  20. I’m just hoping the Rolling Stones will do a fifty year tour so that the area around Jagger’s place in the Loire Valley will become desirable and some oligarch will make me an offer I wouldn’t dream of refusing for my house there.

  21. In 1988, a young economist out of Harvard, Larry Summers wrote a verbose paper entitled “Gibson’s Paradox and the Gold Standard.” In the paper, Summers explains that when the real interest rate is positive, the gold price will not increase and even decrease as parties will prefer fiat currency that increases in purchasing power and pays interest. However, when the real interest rate is negative, the price of gold will increase as parties will seek to preserve their purchasing power. Gold serves as “the canary in the coal mine” for all fiat currencies. When the price of gold rises, this is the prime signal that the currency is being debased.
    Summers mentor Robert Rubin had been using gold in the carry trade while at Goldman Sachs, with the Japanese yen, which had been paying interest rates up to 14% for many years.
    Rubin of course was Secretary of the Treasury prior to Summers and had a strong dollar policy which was maintained by suppressing the gold price. Summers continued this practice and so have successive Secretary’s.
    This could not last forever and now there is a US shortage of gold bullion. Note; the US Treasury, the Fed and it agents at the Wall St banks have combined in this maneouver for many years, they are all short gold and the fiat US dollar is about to be exposed as an’ Emperor without clothes. The faith in fiat is bust.
    To re-iterate an old saying .’At all times & all places, gold is money and a true reflecton of value’.

  22. Reading all the above posts I can see that conditions are ripening for the return of Piracy. Memo to self: Invest in Pirate hat and eye patch manufacturers and those that make scary prosthetics…. ” Now bring me that Horizon!”

  23. I work for quite a number of oligarchs,only as a cleaner nothing intellectual,and many of the staff around the “great and good”tattle,even in different languages.Since August 2011,all the properties I clean in central London have been remortgaged,a small property in Switzerland has been bought,for cash,the remaining monies seem to be used to install safes,well every one of the houses in London now seem to have vast safes.Sorry I have little more insight than the coal face.

  24. The super rich are buy houses not for living in John,sorry John they are that is why they are buying them in many different countries,they have no idea were they will have to run when the banks run

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  44. En jevn bevegelse inn og ut kan gradvis tilvenne rumpa størrelsen,
    og så kan du øke på med noe større. Om du skal bytte på å pule i rumpa og i musa, så ha
    på kondom og bytt mellom hver gang. Du må bare registerer en profil, så er det bare
    å lete i vei.

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  46. Det er lettest om han som er i rumpa ikke beveger seg så mye.
    Ikke bli sjalu over at ingen tar på deg, men
    len deg tilbake og nyt det du ser. Bedre er å ha en ”anal douche” en
    ballong du kan fylle opp med væske, helst tilsatt litt salt.

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