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SUB-PRIME
LOANS & GOLD Gold is doing quite well and holding closely to its gains. Does the below price chart look like a bull market in remission? I don’t think so.
Or how about Tuesdays rise below?
I know you are tempted to feel sorry for gold and maybe even offer it a helping hand. Don’t bother. It doesn’t need your helping hand, but thank you anyway. I receive so many emails from folks who are so worried because gold does not travel in a single uninterrupted straight line trajectory to the stratosphere. Give me a break people and use your common sense and observe very carefully that gold is staying above 600 and staying quite nicely around 650. Gold is definitely in a bull market regardless of your individual worries. “The gold prices are trending higher…” “The trend in gold price is up…” “Gold is trending higher because of possible financial meltdown in the coming months or years. The geopolitical environment is a factor but a very minor factor.” Click Well, I know you have been hearing the term “sub-prime loan” over and over this past couple of weeks. It has even been given as the excuse for the stock market correction. Just what is a sub-prime loan and what the crap does it have to do with our favorite subject – gold? “Basically, sub-prime mortgages are mortgages made to borrowers with poor credit credentials.” Click So folks are getting loans that have a poor credit score. So what? What does this really mean? “Research by the Centre for Responsible Lending has predicted that one in five of the sub-prime mortgages made in the past two years will end in foreclosure, resulting in the biggest crisis for the mortgage market in modern times.” “The centre said 2.2m sub-prime home loans had already failed or would end in foreclosure and that the losses to homeowners could be as high as $164bn” “The data from the MBA showed total mortgage defaults up from 4.67% to 4.95%, but sub-prime delinquencies rose from 12.56% to 13.33%” Click OK. We know what a lot of foreclosures mean. Not too good a thing to happen to the economy in large numbers. “What's all the buzz about Sub-Prime Loans?” “Don't know what a sub-prime loan is?” “What is a sub-prime loan?” “No money down to get in your dream home…” “Thanks to sub-prime loans, this claim was possible for tens of thousands of people. "A sub-prime loan is one that is designed for people with low credit, and usually requires little cash for a down payment; hence a 100% loan…” “These loans make it possible for people with second-rate credit to get financing for a home mortgage…” Click So, are we gradually beginning to comprehend what this has to do with us and including the gold market? Hi David, “My wife has been in the finance industry in the wholesale lending end providing financing to brokers for over 15 years.” “…financing has really dried up, especially for those who are in need (sub-prime borrowers).” “…am I just seeing things? John G. Now what got these lenders into this mess? Ever heard of something called “greed”? “What the problem was and will always be the same problem that is in many businesses--GREED!!” “Taking chances to make more money…” Click What does Mr. Lewis have to say about today’s lending practices? “All these people (ancient civilizations) told us not to lend money at interest: and lending money at interest – what we call investment – is the basis of our whole (financial) system.” C.S. Lewis And how is all this affecting the economy in general? “A disorderly unwinding of that American housing boom - shots of proliferating For Sale signs on US lawns are already peppering television news screens here - might not stop there. Panicking home owners could then tighten their grip on their pocket books and trigger a severe downturn in demand in shopping malls too.” “Worse, hedge funds and other investors in bundled sub-prime mortgage securities might begin to feel the heat. A chain reaction of messy insolvencies and further stock market mayhem could follow.” Click Lets listen to Mr. Lewis again as his words seem to over run with lots and lots of wisdom. “But I should not have been honest if I had not told you that three great civilizations had agreed (or it seems at first sight) in condemning the very thing on which we have based our whole life.” C.S. Lewis And the bottom line is that fewer and fewer mortgage holders can pay their monthly loan payments. “While mainstream mortgage lending in the US tends to be at a fixed interest rate for the whole life of the loan, most sub-prime lending is made at variable rates. And the changes, when they come, can be punitive.” “Thanks to that relentless monetary tightening, more and more holders of sub-prime mortgages are now facing increases in their monthly repayments of between 30% and 50%. More and more of them can't pay. And so defaults and repossessions are spiraling.” “The non-profit Centre for Responsible Lending (CRL) believes 2.2 million households in this market have either lost their homes or face that prospect over the next few years.” Click Does it bother you to witness the price of gold swing wildly up and then hideously down? “No amount of falls will really undo us if we keep on picking ourselves up each time.” C.S. Lewis Perseverance and steadfastness is what makes real money in the stock market. But seriously, what is the real state of the present gold market? “…gold is showing signs for explosive moves raises the concern there may more than just Iranian nuke issue.” “The gold market is looking at the risk of the global financial systems. If the world is faced with deep deflation and potential collapse in economies, a financial meltdown is possible.” “Never the world saw so many bubbles form and burst sequentially!” “In that case, as the world financial meltdown takes place, gold can shoot to levels unimaginable as people from the main street go after throwing the cash to grab the metal.” Click And what does intelligent reader Phil from Canada have to say about all this? Dear Dave, “The United States of America, my dear friends, is "DOOMED".” “What is wrong with America and Americans? Do you folks ever hear the word INFLATION?” “America, unfortunately, is printing itself into dollar oblivion…” “The "ONLY" protection people are ever going to have in this type of environment is to load up on GOLD & SILVER and as much as you can afford.” “It's the only salvation for the little guy...” “…of course I’m LOADED with GOLD&SILVER.......What else can a little guy do to protect himself and his family from the coming storm??????” Phil, Canada. And back to gold. Why now is gold the best investment around? Including uranium, silver and other resource stocks as well. Jim Sinclair - “This situation is serious as the first flame of a financial melt down is getting closer and closer to the short fuse of the interest sensitive over the counter derivatives.” “…the Federal Reserve must act to add liquidity to an already brimming over the top world liquidity situation.” “Since this is super bearish for the US dollar, it is super bullish for gold.” And let’s remember other things that are also important…like freedom. Hello Dave, “Yes, Leonidas certainly did that, and also many other brave men and women sacrificed their lives down the centuries to win our relative freedom today; and yet now, a few pampered retards are busy doing their very best to take it away, and incredibly the very people for which that freedom was won actually let them.” Peter D. “… (an individual) should never give all his heart to anything which will end when his life ends.” C.S. Lewis True and well said but a little gold left in the pockets will insure a sound burial by our relatives. And getting back to gold…are we in a bull market or not folks? “I believe that in the end the truth will conquer.” John Wycliffe, 1384 Gold Letter emails brief reviews of undervalued gold, silver, uranium and other resource stocks that are under valued and poised to rise. Our top 10 best performing stocks are up over 2,000% and our top 50 best performing stocks are up over 500% - 60 minute real time delay when the markets are open. The top 50 represent around 50% of all Gold Letter's recommendations since inception. Gold Letter is the only newsletter that tracks and publishes this kind of exact data on their recommended stocks. You won’t find this precise record keeping provided with any other newsletters. Below here is our mantra at Gold Letter, Inc. “There are always rich men, even in the poorest countries. It is the nature of some men to make money.” Colleen McCullough Email me! Say something intelligent.
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INFORMATION The publisher and its affiliates, officers, directors and owner may actively trade in investments discussed in this newsletter. They may have positions in the securities recommended and may increase or decrease such positions without notice. The publisher is not a registered investment advisor. Subscribers should not view this publication as offering personalized legal, tax, accounting or investment-related advice. The news and editorial viewpoints, and other information on the investments discussed herein are obtained from sources deemed reliable, but their accuracy is not guaranteed. Authors of articles or special reports are sometimes compensated for their services. The opinions of FSU contributors do not necessarily reflect those of Financial Sense. |
