The chill

chill

When Big Box home stores pack it in, you know something’s up. Rona’s decision this week to shutter 11 mega locations in BC and Ontario not only throws too many people out of work (over 800), but coming after weeks of rate turmoil, it chills.

Yeah, yeah, the Quebec-based chain has had the poutine kicked out it by Home Depot. We know that. Two hundred jobs went in February. Another 125 admin positions punted yesterday. But retreating from markets like Mississauga, Abbotsford and Woodbridge – where people are about as house-horny as it gets – is a leading indicator of real estate retreat. The company will also convert 63 more stores into smaller discount centres and trash corporate sponsorship programs.

Why? Simple. Slagging sales in high-cost suburban locations where consumers are pigged out on debt and home ownership rates approach 80%. It’s exactly the scenario central bankers nightmare about – families taking on so much debt to buy inflated houses that disposable income evaporates. Along with jobs.

And now mortgages have jumped. This will not end well.

By the way, American rates have swollen like a donkey in love. Thirty-year home loans just popped from 3.9% to almost 4.5%, for the biggest one-week increase in 26 years, all part of the same rate fever which tumbled the bond market in the wake of speculation the Fed will soon begin tapering down its stimulus program.

Bad news? Higher loan costs might be in Canada, but not so in America. That’s because the Yanks have been merrily reflating the real estate bubble which almost ate capitalism five years ago. House prices in twenty cities are rising at an annualized 12%, the most torrid rate since the spring of 2006, when subprime loans allowed Oakies to buy McMansions in Florida. House sales are the best since 2008. New construction has taken off, with housing starts back above the one million level.

There are bidding wars in Phoenix, Boston, Chicago and Vegas. Prices in Detroit, of all places, have risen 14%. As in Canada, a lot of this has been fueled by tight inventories and dirt-cheap money. So, a rate cool-off is not such a bad thing, even though most economists insist the buying frenzy won’t quell much.

This underscores a key difference with us, of course. Canadian houses cost half again what equivalent homes in America change hands for, since the correction here’s only just begun. A general mortgage rate increase of just 1% in Vancouver or Montreal would slaughter real estate, while in the States rates would have to travel from 4% to 7% before the average home becomes unaffordable on the average income. See how screwed we are?

Of course the greatest screwees will be people living in $800,000 houses with $700,000 mortgages in Mississauga where they can’t shop at Rona anymore, who listened to Peter Schiff and put all their savings into gold bars they keep in Ziplock bags in the guest bathroom toilet tank. Let us pray for them.

Unless they read this pathetic blog when it was first published last night, went to that wicket in Scotia Plaza I pass every day, and handed the rocks over. At least they’d have sold hundreds of dollars above the bottom gold looks destined to reach. The yellow stuff dipped under $1,200 an ounce Thursday night, hitting a three-year low amid the latest news showing the US is irrefutably on the mend. The psychology of gold is worsening by the hour, as stock markets rally and assets like REITs and preferreds (which, unlike bullion, pay you to own them) recover.

As one Wall Street biggie told Bloomberg:  “When the market gets into a trend, people just want to follow it, and now we’re in a severe downtrend, so the psychology has become terrible.” You bet. After gold plunged two months ago there was a huge rush by metalheads and bullion-lickers everywhere to buy more. But after this $200-an-ounce dump… crickets. The simple fact is, you can’t fight the Fed. The future holds a rising America, higher rates and a stronger greenback. No hyper-inflation. No currency crisis. No financial mess. No reason to own gold.

The speculation now is a wave of selling could take the yellow stuff to as little as $800 an ounce. That would represent a loss of almost 60% since the peak in 2011, when this blog told the doomers to collect their profits.

So clearly, there are two crimes against nature. Failure to rebalance. And ignoring Garth.

156 comments ↓

#1 Kim Jong Un on 06.27.13 at 8:28 pm

Fuuurst????

#2 Puzzled on 06.27.13 at 8:30 pm

Garth,

You argue that the US recovery is now well underway. Can you explain something to me?

The Fed has been buying up bonds at a rate of $85 billion a month. I know that Bernanke has hinted that this may come to an end, but not immediately.

Now $85 billion a month times 12 months is over $1 trillion.

The US GDP is about $16 trillion.

Now, if the Fed had decided to stimulate the economy by using the Treasury Department’s freshly printed cash to buy new cars or pencils or houses or televisions or farmland or anything really other than bonds, I figure that this would have made a contribution to US GDP of $1 trillion. On a GDP of $16 trillion, this would have increased GDP by 6.25%. Not bad growth.

Now I know that the Fed can’t hold cars or pencils or houses or television or farmland on its balance sheet. So it holds bonds.

My point is…. all that money printing could have otherwise generated 6.25% growth — and all the US has is a paltry 1.8%.

Am I misunderstanding something, or is this US recovery that bad. I mean, even though the Fed bought bonds, in an ideal world those who were holding those bonds would now have an extra $1 trillion to spend on cars and pencils and … (you get the idea).

So all this stimulus and I figure we are still more than 4% behind where we should be in growth.

Can you explain?

Thanks!

Sure thing. The Fed doesn’t print money. — Garth

#3 Paul on 06.27.13 at 8:36 pm

Thank you Garth, wonderful article. First!

#4 kilt on 06.27.13 at 8:45 pm

Noticed 10 year rates at TD went from 3.69 to 4.29 this week. And $800 an oz is a good price for gold. Unfortunately 75% of rhe gold miners cant make money at that price. Should make for interesting times.
Kilt.

The 10-year was a great deal. Hope many took the bait. — Garth

#5 Squatter on 06.27.13 at 8:49 pm

Garth: So clearly, there are two crimes against nature. Failure to rebalance. And ignoring Garth.
——————————————————
Ever thought of starting a new religion?
The Church of Garthology maybe!

Bless you. — Garth

#6 T.O. Bubble Boy on 06.27.13 at 8:50 pm

So clearly, there are two crimes against nature. Failure to rebalance. And ignoring Garth.

I thought that the Tar Sands were a crime against nature?

#7 Scarberian on 06.27.13 at 8:50 pm

Yes, it wont end well. Prices in north York and thorn hill are stubbornly high and inventory is increasing. Condos here are holding too. But what I don’t understand is price increases in scarberia (aka scar Lanka or scarlet )
How can you justify a 800k house near Danzig street in the kingston morning side area..?

Or let’s take markham, not too far from Scarborough, where boxes cost more than in willow dale?

#8 timmy on 06.27.13 at 9:01 pm

You neglect to mention one huge factor in this rising tide of the US: lack of good paying jobs. Many people have been unemployed for over two years. The states have offshored so much of their manufacturing and good paying jobs that the recovery is very tepid.

#9 Jean Valjean on 06.27.13 at 9:02 pm

#2

It’s ‘e-credit’ (virtual money) loaned to the government and backed by commoners taxes.

Please refer to Bank of England Act 1694 to gain a deeper insight:

http://www.bankofengland.co.uk/about/Documents/legislation/1694act.pdf

#10 Musty Basement Dweller on 06.27.13 at 9:04 pm

“swollen like a donkey in love” and several other phrases that had me choking on my wine. Garth you are on fire. This is a rocking post. I rent an apartment now and am watching stuff start to swamp the market now in Vancouver, while thousands more units are under construction. Awful times ahead for some fools, I fear.

#11 Smartalox on 06.27.13 at 9:04 pm

What will be the knock on effects of the recent drops in gold and silver? Barrick is laying people off, but what about armored car services, and other companies that service the gold boom? Who’s next?

#12 Goldtanking on 06.27.13 at 9:05 pm

Gold broke $1200 ….. Here comes sub $1000…. Notice you don’t see many cash for gold commercials lately?

#13 Mr.Hulot on 06.27.13 at 9:11 pm

Today you almost made me pee in my pants with the “swollen donkey” and the “Gold bars in the toilet bowl” reference. Held it just in time.

#14 Old Man on 06.27.13 at 9:16 pm

#7 Scarbarian – if you are a buyer there are bargains at Jane and Finch.

#15 bigtown on 06.27.13 at 9:17 pm

Driving on Winston churchill near the 403 I noticed many SOLD signs on townies and those sfh on 20 foot lots. We used to live in Mississauga back in the 80′s and almost all of us had AGRAPHOBIA because it was so LARGE AND SPREAD OUT AND EMPTY but now I guess the City Planners decided to downsize and it kind of looks like that little toy place for kids that Vanderzam (crazy B.C. premier from 80′s) used to own in Richmond. Kinda hard to get nostalgic due to the new midget format.

#16 Cranston Snord on 06.27.13 at 9:18 pm

>gold bars they keep in Ziplock bags in the guest bathroom toilet tank.

Garth, I’m not sure what’s in the water out there, but gold shouldn’t oxidise, stain, or tarnish underwater. The ziplock bags are unnecessary.

They keep the piranha out. — Garth

#17 Mister Obvious on 06.27.13 at 9:18 pm

Gotta say it… tonight’s blog rocked!

—————————

I rode transit down Cambie Street today. Lots and lots of new condo development is just breaking ground.

Baffling. Tell me again… how does this end?

#18 City that smells like it sounds on 06.27.13 at 9:21 pm

Gold is awesome. It’s just coming back down to a more proper value, like many of us hope will be the case with real estate.

#19 My thoughts on 06.27.13 at 9:22 pm

Dear speculators! Build them and sell them before its too late. Those that sold this spring summer got out in time by the looks of things… Does not look promising in the future. Many speculators trying to get out of their properties. Lots of plans stopped after the first review. Cold feet… Financing falling through!

#20 My thoughts on 06.27.13 at 9:27 pm

When did 3.3 in suburbia become a semi new normal for high end homes. Expecting at least a 30-40% correction in home prices based on my MLS findings this evening. Seriously how many buyers are there in the 3 million dollar price range?

#21 Smoking Man on 06.27.13 at 9:27 pm

Why am I so lucky?

It’s the way I think. For years I went against Garth and did good, last fall, things that I thought would happen in USA did not. Why?. I went with fundamentals.

Did not make sense, still don’t. Kind of like the Canadian real estate market.

You can never go against the little voice inside your head.

Right now I’m totally going with Garth, but not for the same reasons he has. He believes in apple pie.

I believe but have no proof that the white house, the fed, the congress and senate are full of crooks and corruption. They know via NSA spy bots they have an armed and mad populous, at all cost they need to get the economy back or everyone loses. I have watched for the last 6 months the S & P go up void of retail money, all on BS stats, just Banks, hedge funds, insurance trading. Yet it keeps going up. Home Depot shares have doubled but as the income statement shows sales have been flat for two years.

https://www.google.com/finance?q=NYSE:HD&fstype=ii

Now if one adds everything up, researches, gets to the truth, read through the robo stats they put out, you would need to be insane to invest in Stock Market.

But it took me a bit of time to figure it out but the Fed and the US govt can, not and will not let the markets crash, they will print to kingdom come. And do whatever it takes.

The moral of the story is when Garth says USA is on fire, weather it is or is not does not matter, big brother will make it so…

Maybe Gartho knows this, or he eats to much apple pie?

Pantagruel yesterdays posts 226 and 229 your answer

#22 Frustrated Kiwi on 06.27.13 at 9:34 pm

#2 Puzzled
Here’s a recent posting that expands on Garth’s “The Fed doesn’t print money” statement.
http://pragcap.com/qe-myths-and-the-expectations-fairy/comment-page-1
Pretty critical of QE in general.

#23 Big Al (New) on 06.27.13 at 9:35 pm

“Sure thing. The Fed doesn’t print money. — Garth”

“Now, you might ask the question, well, the Fed is going out and buying 2 trillion dollars of securities – how did we pay for that? And the answer is that we paid for those securities by crediting the bank accounts of the people who sold them to us, and those accounts, at the banks, showed up as reserves that the banks would hold with the Fed. So the Fed is a bank for the banks. Banks can hold deposit accounts with the Fed, essentially, and those are called reserve accounts. And so as the purchases of securities occurred, the way we paid for them was basically by increasing the amount of reserves that banks had in their accounts with the Fed.” BSB

I guess your right they didn’t print that would take way more effort than a key stroke.

#24 TurnerNation on 06.27.13 at 9:36 pm

Heard that many bond funds are trading discounted to NAV , as people are rushing the exits. Nothing to see here citizen; move along.

#25 Dire Straits on 06.27.13 at 9:39 pm

Money ain’t for nothing.
And the Chicks for free.
Governments at all levels in Canada and the USA are practically bankrupt.
And so are most of the average Joes.
And the mighty USA’s GDP just grew by a whopping 1.8%.

#26 Old Man on 06.27.13 at 9:42 pm

I wish the Americans lots of luck with their dream of coming into to Canada, as BCE rules because the CRTC approved a deal for $3.4 billion for the takeover of Astral Media, so that is a checkmate; nobody will mess with BCE one way or another.

#27 NFN_NLN on 06.27.13 at 9:46 pm

Garth, I’m not sure what’s in the water out there, but gold shouldn’t oxidise, stain, or tarnish underwater. The ziplock bags are unnecessary.

Calcium build-up on gold coins due to hardwater…. not in my Canada god-damn it!

#28 tim on 06.27.13 at 9:47 pm

if you shop at the dollar store, yeah, pretty much everything is made in China. You shop for the big yellow stuff like I do ( by this I mean heavy duty equipment) and the Good ole’ Made in USA is stamped on every piece.

I spent more this fall on that stuff than a street of suburbanites would spend at Walmart in a lifetime.

#29 Bargains everywhere on 06.27.13 at 9:49 pm

I inherited my grandmother’s sterling silver flatware. Hopefully if silver prices keep coming down I’ll finally be able to add to her set. Of course, my husband says I should’ve melted what I have but I remember using it at her house as a little girl so there is real sentimental value for me.

#30 TurnerNation on 06.27.13 at 9:52 pm

“And ignoring Garth.”

Quizzical. CPC says “Garth who?” LMAO.

#31 Smoking Man on 06.27.13 at 9:55 pm

#25 Old Man on 06.27.13 at 9:42 pm
I wish the Americans lots of luck with their dream of coming into to Canada, as BCE rules because the CRTC approved a deal for $3.4 billion for the takeover of Astral Media, so that is a checkmate; nobody will mess with BCE one way or another.
………………………

Good point OLD man but its Canada, wink wink nudge nudge.

American Airlines, Delta, US Airways all charge same crazy prices as west jet, and Air Canada.

It can happen but not with out a little back room price fixing

#32 NoName on 06.27.13 at 10:10 pm

“who listened to Peter Schiff and put all their savings into gold bars they keep in Ziplock bags in the guest bathroom toilet tank”

What an elegant, modern and classy solution to save on water, safety deposit box and help environment. I guess I am just bill hilly I use brick…

#33 I love libraries on 06.27.13 at 10:13 pm

I know you say that it won’t end well, but the question is, WHEN will it end? That is where the opportunity is.

#34 Saint Herb on 06.27.13 at 10:13 pm

#19 My thoughts on 06.27.13 at 9:22 pm

The developer that bought my land 2 years ago has been working on rezoning and permits but has not got the approval yet. He just put the properties for sale with the proposal but not the permit. Why spend 2 years getting permits and then sell just before getting the permit. If he completes the development he would make 3-4 million profit, but he is bailing.
Why?

#35 Jordy on 06.27.13 at 10:14 pm

The problem with gold is that it isn’t needed for anything. I can go years before I need to buy anything made of gold, but I buy oil, food, natural gas, electricity etc every month

#36 Old Man on 06.27.13 at 10:23 pm

#29 Bargains everywhere – count yourself lucky as my parents left me a chest of silver that was plated, and never used it, as bought a cheap set at Walmart, but have a few paintings that are mint from Europe years ago from 1780 to the mid 1800′s with famous names, and want to blow them off. So should I place them into an auction sale, or would Mr. Turner want to make a deal with me?

#37 Smoking Man on 06.27.13 at 10:26 pm

Why I don’t talk about Gold on here.

It’s like choosing sides between supporting Israel and Palestine.

No matter what side you pick your going to lose friends.

#38 Mihai on 06.27.13 at 10:33 pm

The 10-year was a great deal. Hope many took the bait. — Garth

Please explain with the high price of houses and due to correct, how is it a great deal to get in debt?

We still have the option for 5 y @ 2.89 but housing is still unnafordable. Should we buy because we can get cheap money?

#39 Nemesis on 06.27.13 at 10:46 pm

http://tinyurl.com/p36dudm

[NoteToGT: Please don't ask. But if you must know... my GreenCard expired.]

#40 Yitzhak Rabin on 06.27.13 at 10:49 pm

WTI Oil is at $97/barrel. Priced in gold, it has not been this high for a very long time.

Most gold mines produce an ounce for over $1,200. Either the costs will have to come down (energy, oil, labour, etc), or you believe that for the first time in 5,000 years no one in the world will want gold.

Also interesting to note is who is taking the other side of the gold trade. ETF liquidations are being scooped up by central banks in Russia, Turkey, and Kazakhstan. China last announced their gold reserves in 2009.

Gold is currently the market’s whipping post. Will be interesting to see how the shorts do when they cover, and at what price. And where the gold is going to come from.

If you believe $800/ounce is coming, perhaps you should short it with extreme leverage in the futures market and retire comfortably.

If $1,900 gold incorrectly priced in high inflation and currency turmoil. Perhaps $1,200 gold is incorrectly pricing in deflation and economic recovery.

By the way, US municipalities had much turmoil this week. Detroit bankrupt, Illinois has horrible bond auction, 3 school districts default on obligations, pending defaults in Rhode Island, auctions postponed everywhere.

Don’t underestimate how addicted the economy is to cheap credit on BOTH sides of the border.

#41 AACI Home-Dog on 06.27.13 at 10:50 pm

Garth, REITs have treated me well in the past few years, but I am worried the ride may be over for some of them in the next few months or years. Commercial property REITs, especially, as retail commerce seems to be morphing to increased internet sales. Rio-Can, for eg. owns a shopping centre in my area, and there sure are a lot of vacancies in there lately…

#42 Basil Fawlty on 06.27.13 at 10:55 pm

Remember the refrain; “This isn’t a gold site”?

We will hear that again!

#43 elcid on 06.27.13 at 10:59 pm

Garth…you, of all people lying on your own blog. Tsk, tsk….Peter Schiff never recommended sinking all savings into gold. He clearly says that a majority of investments should be in dividend paying stocks. Even a mere mention that QE might be tapering sank the stock markets around the world. The Japanese with Abenomics are printing money like crazy, the Chinese have their own QE pumping like crazy. Bernake isn’t going to stop QE because he can’t. If he did he would cause a sovereign debt crisis in the US. It is now a race to devalue currencies…

Of course stimulus spending will cease. Looks like it will commence in less than 100 days. Are you ready? — Garth

#44 george soros on 06.27.13 at 11:06 pm

Bad news? Higher loan costs might be in Canada, but not so in America. -Garth

Huh… ok you are now just silly to say that higher interest rates are bad for one country but not another especially the most indebted nation in the world, what department did you work for again in the government again ?

The one where people can read. Try it. — Garth

#45 Arse on 06.27.13 at 11:10 pm

All things come to end. So will all bubbles, stock market and real estate.

#46 drydock on 06.27.13 at 11:25 pm

“Swollen like a donkey in love”

What a great name for a rock band.

#47 Piccaso on 06.27.13 at 11:29 pm

Verizon Communications has reportedly moved closer to entering the Canadian wireless market, having offered to purchase beleaguered operator Wind Mobile and initiating talks with equally-troubled Mobility.

Reuters reported that sources claimed Verizon has offered up to $800 million to purchase Wind, seeming to confirm reports from earlier this month that Verizon was interested in entering the Canadian market. That entry is expected to take place ahead of Canada’s planned auction of 700 MHz spectrum licenses, which was recently delayed until early next year. The delay was needed as the Canadian government was looking at ways to infuse more competition into the country’s wireless market that continues to be dominated by three operators: Rogers Wireless, Bell Canada and Telus Mobility.

Wind’s future was recently put in doubt when Orascom Holdings announced it was backing away from consolidating its ownership in the carrier. Those moves had initially been put in place after a successful legal fight over foreign ownership rules.

Mobility is in a similar financial situation as the Canadian government recently denied a deal for Telus to acquire Mobility citing the need to maintain competition in the market.

Wind, Mobility and Public Mobile all entered the Canadian market following the acquisition of 1.7/2.1 GHz spectrum licenses during a government auction in mid-2008. All three operators looked to break into the market by offering rate plans that undercut those offered by the three established players, but have so far struggled to maintain profitability.

The Canadian government has instituted rules for the upcoming 700 MHz spectrum auction designed to again promote new entrants by preventing established operators from gaining access to many of the licenses. Verizon currently owns 55% of Verizon Wireless, but has said it would be interested in acquiring the 45% stake currently controlled for Vodafone Group, which analysts have priced at more than $100 billion.

#48 oceanside on 06.27.13 at 11:30 pm

But have a few paintings that are mint from Europe years ago from 1780 to the mid 1800′s with famous names, and want to blow them off.
******************************************
Sounds like the Canadian Club scotch drinkers that were around a month or so ago…

#49 Old Man on 06.27.13 at 11:32 pm

Well will throw out two names and hold the 3rd one back. William Shayer Sr., and Francois – Marie Firmin Girard in mint condition that bought 15 years ago with a top auction house.

#50 Donald Trump on 06.28.13 at 12:01 am

This is how the recovery begins

DETROIT WILL BE FIRST BIG CITY TO AXE PENSIONS

http://www.republicbroadcasting.org/index.php?cmd=news.article&articleID=5484

QUOTE:

Detroit emergency manager Kevyn Orr met Thursday with labor groups to tell them what they already know: He won’t spare public employees in his mission to make the city solvent. Orr’s preliminary report to creditors, released last Friday, says “there must be significant cuts in accrued, vested pension amounts for both active and currently retired persons.” That would be a game-changer.

If it takes effect, Orr’s proposal would mark the first time a large government pension plan sponsor has rescinded benefits for both active and retired employees. It could set a precedent for cities — as well as states — in financial emergency to restructure pensions the same way as other debts by paying out cents on the dollar instead of making them whole. The emergency manager also announced he has ordered a probe into the city pension funds and employee benefit programs to investigate possible waste, fraud and abuse.

Orr has his vision for staked Detroit’s financial reorganization on fairness. “We want to put everyone on notice that we’re going to treat them equally,” Orr’s spokesman Bill Nowling said. “We’re not going to pit union stakeholders against creditors.”

But while the two main Detroit funds say they have $5 million stashed to wage a legal battle, that isn’t likely to deter Orr from having his way. Even if he can’t get an out-of-court agreement, Orr’s work will likely be the blueprint for reorganization. A judge would be hard-pressed to reject a pre-packaged bankruptcy plan to which 80 to 90 percent of Detroit’s creditors agree.

#51 Pole Shifting Nosty on 06.28.13 at 12:06 am

-
#21 Smoking Man — “I believe but have no proof that the white house, the fed, the congress and senate are full of crooks and corruption. They know via NSA spy bots they have an armed and mad populous, at all cost they need to get the economy back or everyone loses. I have watched for the last 6 months the S & P go up void of retail money, all on BS stats, just Banks, hedge funds, insurance trading.”

Yo SMan! There is a consistent thread with all this. CIA / Mossad causes trouble outside the US, FBI creates false flags (murders reported as suicides) inside to keep sheeples distracted ( here ).

For example, Michael Hastings Bomb? or Remote control car crash?, Edward Snowden ( DC’s got it’s nuts in a knot b/c he left a lot of duplicates around), Aaron Swartz and others. All is not as it seems.

#52 Pascii on 06.28.13 at 12:07 am

” Canadian houses cost half again what equivalent homes in American change hands for, since the correction here’s only just begun.”

Don’t you mean the other way around? Aren’t Canadian homes more expensive?

What I said. — Garth

#53 2nd Class on 06.28.13 at 12:18 am

I listened to Garth then used some leveraged funds (inverse gold and s&p) with a mix of REITs and a few gambles in my TFSA.

Can’t go wrong with what Garth says. Being diversified, any of my losses have been more than made up for by my gains. Just wish I had more US exposure.

:) Every day in the market is a happy day.

#54 torontorocks on 06.28.13 at 12:19 am

hey AACI – I’m in XRE and I purchased FCR (First Capital Realty) – check out their portfolios. great anchors.

#55 Tom from Mississauga on 06.28.13 at 12:23 am

Where the Rona Mississauga is closing around the corner from there the Kelsey’s, Montana’s and Future Shop recently closed. Daniel’s Corp as a condo town house development nearby too, they always sold out in one day. Only 80% sold on opening and 30% of those deals came back on financing. As Mr Lahey would say “the Shithawks are swirling”.

#56 Tony on 06.28.13 at 12:24 am

Re: #2 Puzzled on 06.27.13 at 8:30 pm

All Bernanke and the Fed’s lies backfired on them. As America does down the drain we are led to believe in some fictitious recovery and non-existent real estate recovery. Thus interest rates soared when in reality they should have fallen. They had to downgrade the GDP to 1.8 percent and needless to say the June job figure will show something around 50,000 job gains or less. Maybe even job losses.

#57 Yellow rocks rock on 06.28.13 at 12:26 am

#40:
with respect, $1200/oz is on the high end (deep mines in SA).

For shallow mines, it’s about $900 (so they tell us). In reality , probably lower.

#58 The chill — Greater Fool – Authored by Garth Turner – The Troubled Future of Real Estate | The Affluent Boomer on 06.28.13 at 12:36 am

[...] via The chill — Greater Fool – Authored by Garth Turner – The Troubled Future of Real Estate. [...]

#59 Nemesis on 06.28.13 at 12:42 am

#39 Addendum:

Naturally, in the beginning it was a TrulyMadlyDeeply thang.

But inevitably, her incessant braying combined with the ugly expediency of sharing a cramped stall with her BattleAxeMother [who scarcely approved of MixedMarriages, let alone dissolute, peripatetic cryptozoologists] as we awaited the arrival of ‘Jr.’…

Well, let’s just say that the obstacles were insurmountable.

Still… what a MagnificentMadLove it was!

http://youtu.be/clCROz5ZcQc

More’s the pity… In a moment of ill considered, drunken nostalgia I googled her in hopes of rekindling our early, elemental bliss…only to discover – to my considerable distress that…

http://tinyurl.com/chrvf9c

#60 broadway skytrain on 06.28.13 at 12:47 am

I thought that the Tar Sands were a crime against nature?
———————————————————-

of course you mean that god spilled all that heavy oil all over the ground in alberta, yes?

damn god, he should stop trashing the planet.

thankfully somebody is cleaning it up – go shell!

#61 KommyKim on 06.28.13 at 12:47 am

RE: #40 Yitzhak Rabin on 06.27.13 at 10:49 pm
Most gold mines produce an ounce for over $1,200.

That would mean that there was no profit in mining gold prior to 2010. Sounds a little ridiculous don’t you think?

#62 gold is for pirates on 06.28.13 at 1:04 am

I wonder…..Is there a possibility of gold demand in the future because of it’s use in electronics? Gold is the best conductor and virtually all electronics contain gold in small amounts. It is generally not considered worth the effort to harvest it. Electronics are more disposable than ever and will continue to be. Could we see a dwindling supply of gold in the future?? Though I am not currently a gold investor I’m thinking if it goes low enough, I just might buy some yellow rock based on this theory.

#63 GarthsBigBrother on 06.28.13 at 1:07 am

>>The yellow stuff dipped under $1,200 an ounce Thursday night, hitting a three-year low amid the latest news showing the US is irrefutably on the mend

Um…no. It shows that QE is ending.

#64 DrMarthaWinston on 06.28.13 at 1:14 am

Oh dear, Garth, yet another clanger! Look at the price of gold over the past couple of decades: notice how it went *up*, not *down* as the economy improved from 2000 to 2008/9. The reason it’s going down now is because the US government’s quantitative easing programme is coming to an end – it’s not an indicator that the US economy is recovering (which it’s obviously not).

#65 Van guy on 06.28.13 at 1:28 am

Thanks Garth for making me some coin. I bought a large chunk of HBD 2 months ago when you were screaming at the gold bugs. Thanks for the tip, you’re awesome dude!!!

#66 Debtfree on 06.28.13 at 1:58 am

Really like all the goldbugs being out of touch with reality . The other day I heard with a straight face smoken joe Oliver say on national tv ” there is no tar in the oil sands ” . Did he used to work for big tobacco? I guess we’ll have to change tar and gravel roofs to oil and gravel roofs . The oilpaper shingles won’t be anymore slippery than the tarpaper singles of old . What a weird alternate reality we live in . Garth must laugh himself queezy every day . P&P with Evan Solomon a laugh a minute .

#67 jim on 06.28.13 at 2:03 am

Indeed, the market is picking up here in the Bay Area. Double digit increases in rents and prices in the last two years, I believe. I am not happy about interest rate increases here, but comparing homes in California to any part of Canada is a riot.

Oh, if gold crashes to 800 and people are cursing it, that’s the time to buy.

#68 CatFoodLady on 06.28.13 at 2:05 am

You folks are increasingly making me feel like a kindergarten kiddie who’s accidently stumbled into a high school class room. You’re throwing around terms I’ve seen but don’t understand.

But that’s okay. I’ll learn.

I read Money Road & a few other books Garth wrote, as well as other material over the past 6-8 months. A lot of it went right over my head. To be honest – I think I tried to cram in too much & ended up with analysis paralysis. Here I was with the money, needing to invest it & still wasn’t sure how. Fundamental analysis, technical analysis? Oh help! Moving averages? Aaaahhh!!! Right now, I’m happily rereading Money Road & some of the materialo is becoming more clear.

I figured it was best to start with what I know & what made sense.

Diversify – can’t go too far wrong. I’m in the process of rebalancing because although I diversified, I didn’t do it correctly. No biggie as I still made money. I’ll be honest & admit that was probably beginner’s luck. I had way too much in Canada & I think we’re seriously starting to contract.

Don’t lock in losses. I’m sitting on a couple of cyclical holdings – REITS I’m not concerned about nor does the financial sector worry me. Banks always find a way to make money. Energy? Yeah – thankfully I can hold that a good while.

If you look at it correctly, you know more than you think you know. I know plenty of people working in all sorts of industries & services at different levels. I ask them: “How’s business?” Ask enough people that question over time & trends become apparent. I shop – for groceries & other garden variety consumer goods. I pay attention to what is moving, what stores are busy, etc. It adds up.

I don’t do anything I don’t understand – which means I’m fairly limited in what I do; at least for now. But I can sleep at night & I’m ahead of inflation, fees & the CRA.

Everybody wants your money & nothing is free. There’s always a cost to investing – measure that versus potential gains & other losses – find your fit.

I found I was spinning my wheels until I’d determined a long term goal. Mine is pretty straightforward. Use what I have to make more to allow for more choices later in life.

It’s a volatile world out there, change is constant. But the more I observe, question & learn, the more many things make sense.

But man, I’ll be glad to get to a learning level where school days don’t require nap time.

#69 groovin123 on 06.28.13 at 3:07 am

The US FED isn’t printing money?… So they’re buying assets with trillions that were just lying around in a GIC the whole time?

Here’s a chart of M1 for you.

http://research.stlouisfed.org/fred2/series/M1SL

Perhaps you should google ‘M1 money supply’.

So if there’s relatively tame inflation, at the same time the money supply is ballooning, what can be said about the velocity of money?

Well kids, that means its still in decline.

So the economy is recovering, yet the velocity of money is decreasing?.

Stick to real estate man.

Yes, recovery, low velocity. The effects of QE on economic activity are much less dramatic than on your brain. — Garth

#70 groovin123 on 06.28.13 at 3:11 am

Oh, and for bonus points – tell me what happens to the rate of inflation when the economy actually does recover, and the velocity of money accelerates?

Bonus, bonus question : Which asset class would you like to own in such a situation?

Hint : NOT bonds, lol.

#71 Dean Mason on 06.28.13 at 3:30 am

To Kilt #4

Don’t get your mortgage at TD bank at 4.29% for a 10 year fixed mortgage.Meridian Credit Union is still at 3.69% for a 10 year fixed rate mortgage.The big banks don’t need more business anyway.Give to competitors like credit unions that have lower mortgage,car loans,credit card,line of credit rates.

#72 Dean Mason on 06.28.13 at 3:42 am

To Kilt #4

ING Direct has a 7 year fixed rate mortgage at 3.55%,10 year fixed rate mortgage at 3.79%.Manulife Bank has a 7 year fixed rate mortgage at 3.69%,10 year fixed rate mortgage at 3.89%.First Ontario Credit Union has a 7 year fixed rate mortgage at 3.59%.First Calgary Financial has a 7 year fixed rate mortgage at 3.58%,10 year fixed rate mortgage at 3.68%.

#73 Buy? Curious? on 06.28.13 at 4:48 am

Hey Garth! So your calling Gold’s bottom will be at around $800/oz? Man, you’re good! I can be patient with that one. For now, I’ve only got two investments, my house and my life savings in ONE stock! I know it’s risky but I think timing has always been on my side. I’ve got more luck than brains.

http://www.youtube.com/watch?v=U-n_zk7e0ZU

#74 Jaydesi on 06.28.13 at 5:00 am

Sure thing. The Fed doesn’t print money. — Garth

The Fed may not physically print the money. Just like the BoC doesnt physically print the money. But the BoC does print money. The RCM just physically prints it for them. Likewise someone is printing money for the Fed. Bernanke also said when asked in a congressional meeting where got the money.. he said “I printed it”

#75 From Mississauga with Love on 06.28.13 at 5:57 am

You’re delusional Garth. Mississauga is getting dominated by INdians and Chinese (at least where the real estate activity is). They will never sell at a loss. I know of a listing on Haydonbridge court where the delusional lady is hanging on to her house for 875K for 1.5 years now refusing to budge. Had an agent, then went private, then now an agent, refuses to budge. People in Mississauga will eat rats than lose their house. INdians pack multiple families and will rent basement and even a room on the second floor to afford the mortgage.
Now, the white areas (Lakeshore, Clarkson, Mineola), yes a different story. They will get hit.
But INdian areas, forget about it. I have seen it all too often. They will raise the prices then sell at less to make each other think they are getting a good deal. THat’s how they think.

Now we know how you think. Get lost. — Garth

#76 Angie on 06.28.13 at 7:32 am

Love your analogies, they always make me smile.

#77 bigrider on 06.28.13 at 7:39 am

Garth-”but retreating from markets like Mississauga, Abbotsford and Woodbridge- where people are about as horny as it gets..” referring to RE obsession.

Should have read- “…retreating from markets like Woodbridge, WOODBRIDGE and WOOOOODDDBRIDGGGGGE where people are as horny as it can possibly get !!!”

#78 Buy? Curious? on 06.28.13 at 7:43 am

Hey Garth! I’ve read in a few places, Reuters, Huffington Post, and Gawker (yes, Gawker. I’m not a News Snob) that with this housing price appreciation in ‘Merica, there’s a prediction of another housing bubble being inflated. I know when people hear you throwing up numbers like average Detroit houses prices up 14% (Who cares? It’s Detroit. When was the last time you were there?) think that they can buy low and sell high. Before every major crash, there’s a run up on housing prices. Look up historical house price averages and compare them to the crashes. (I don’t have time to post up the links because I have an aquafit class I want to make).

And one more thing, if anyone comes up to you this weekend and says they’re Buy Curious, I swear it isn’t me. But I’m not here to judge. I’m here for the free advice and to meet chicks.

http://www.youtube.com/watch?v=HjZ5mflANcE

#79 maxx on 06.28.13 at 7:58 am

Very cute picture Garth- and very au fait, as too many of our furry friends suffer the summer heat just as we do. The stupidity confounds me when I hear of another pet being left unattended in a car…..

Tragically occurred with a child in the GTA this week. — Garth

#80 drydock on 06.28.13 at 8:07 am

Dubai.

http://www.thenational.ae/

#81 drydock on 06.28.13 at 8:17 am

http://geology.com/minerals/gold/uses-of-gold.shtml

Tired of people saying gold has no intrinsic value,educate yourselves a little.

As an investment asset, it is pure speculation. — Garth

#82 David W on 06.28.13 at 8:19 am

Garth knows what he is talking about.

A few weeks ago I was able to get a 2.89% 5 year fixed rate from mortgage brokers in Ottawa and now it is 3.39%. That’s a .5% point jump!!!!

Luckily, they still offer a 10 year rate at 3.69% so take Grath’s advice and lock in!!!

#83 Basil Fawlty on 06.28.13 at 8:24 am

“Of course stimulus spending will cease. Looks like it will commence in less than 100 days. Are you ready? — Garth”
Marc Faber says; “QE99, here we come”. If anything, the stimulus spending will increase. Tapering will kill the new stock market and real estate bubbles.
The Bernank is looking for a bigger helicopter!

Only guys like you follow guys like Faber. Fringe. — Garth

#84 Stickler on 06.28.13 at 8:40 am

When Garth says “Don’t bet against America” I think he means don’t bet against large American corporations.

- 83% Of US stocks are in the hands of 1% of the people

- 61% of Americans always or usually live paycheck to paycheck (up from 49% in 2008 & 43% in 2007)

- 66% of the income growth between 2001 and 2007 went to the top 1% of all Americans

- 43% of Americans have less then $10,000 saved for retirement.

- Banks own a greater share of residential housing net worth then all individual Americans put together

#85 Chris on 06.28.13 at 8:44 am

Yeah but if you’ve been buying gold since the very lows… you’re still laughing today.

Only a fool would not take profits. Then again, fools laugh at anything. — Garth

#86 Captain Critical on 06.28.13 at 8:44 am

Gold is the best conductor and virtually all electronics contain gold in small amounts.

NOT true. Copper is the best conductor. Gold is used in electronics for contacts because it does not oxidize and compromise the electrical connection.

#87 gotthardbahn on 06.28.13 at 9:11 am

Nice try Garth.

US home sales and mortgage applications are up because the recent rise in bond yields – triggered by loose Fed talk of an early tapering to QE – forced undecided buyers into the market, fearing that mortgage rates were headed north and NOW was the time to take the plunge. Recent statements by William Dudley and others have made it clear QE is here to stay for quite a long time yet – and he oughta know.

Yesterday’s Q1 GDP numbers are yet more evidence, as if more was needed, that the US economy still sucks. And next year’s imposition of the widely-unpopular Obamacare – even Democrats are calling it a train wreck – will ensure declining consumer confidence and a weak US economy and lots more QE. Following that, barring a major improvement in the standing of the embattled Obama administration, the GOP looks set to hold the House and take the Senate, leaving America with a divided government. Bottom line is that until Mr. Obama and his remarkably silly ‘progressive’ policies are gone, it is premature to declare that ‘America is back’.

Wrong. The housing sales numbers I referenced (most recent) were for a period weeks before the Fed talk. Meanwhile GDP growth of almost 2% is just fine. You bullion bunnies were screaming ‘reession’ – negative growth – six months ago. Epic wrong. BTW, we found out today the US is growing at a rate double that of Canada. — Garth

#88 brainsail on 06.28.13 at 9:14 am

Will BBRY recover?

#89 Burnt Norton on 06.28.13 at 9:30 am

#75 From Mississauga with Love on 06.28.13 at 5:57 am

From Mississauga eh? Better watch out for that “blue ice” falling from planes. I guess we’ll be seeing folks with umbrellas up this summer. No wonder your post above is bitter.

http://www.cbc.ca/news/canada/toronto/story/2013/06/27/toronto-poo-bomb.html

#90 peter on 06.28.13 at 9:34 am

Very true and funny article, specially the horny woodbridge lol… – where people are about as house-horny as it gets –lol…however I am starting to feel a hangover in this area.

#91 Mister Obvious on 06.28.13 at 9:39 am

#34 Saint Herb

” Why spend 2 years getting permits and then sell just before getting the permit. If he completes the development he would make 3-4 million profit, but he is bailing. Why?”
———————-

It’s been posted before, but maybe here’s why…

http://www.liveatalba.com/

#92 Basil Fawlty on 06.28.13 at 9:39 am

“Only guys like you follow guys like Faber. Fringe. — Garth”

Yes, Marc Faber another “fringe” Phd in Economics.

Lets see if your commencement of stimulus reduction begins in 100 days. That would be early October.

Not my forecast, but the consensus opinion – among the non-fringe set. — Garth

#93 From Mississauga with Love on 06.28.13 at 9:51 am

Garth’s response to my post, and #89 Burnt Norton

both of you very classy. I was pointing out what is evident to people who live here. Time will tell who is right. No SFH that is worth looking at in Mississauga is under 600k right now. to get something really nice, you definitely have to go over 800.

White areas are getting hit, as I said, not because I am racist, but because a larger portion of homes in those areas are > $1M, and you know the rest of that story.

But both of you, very classy indeed.

Anyone who comes here and describes neighbourhoods as ‘white’ or ‘Indian’, making economic generalizations based on race and ethnicity, deserves to be cuffed. — Garth

#94 Holy Crap Where's The Tylenol on 06.28.13 at 9:58 am

#47 Piccaso on 06.27.13 at 11:29 pm

I for one have been anxiously awaiting the day when the CRTC would bend over and take it up the posterior with their archaic rules. There is no competition here in Canada. Competition is good, it makes people become creative in order get an edge on their competitors. It creates competitive rates by eliminating fat profit takers that milk the system. When I lived in America i had a phone from an unnamed service provider that gave me around 1000 minutes per month nation wide plus free weekends, evenings, this is not including all of the data and perks. My cost was $48.00 USD per month. Moved back to Canada and boy was I in for an epiphany! Started with Bell crazy rates good service, then Rodgers better rates OK service, was going to jump to Telus but decided to go cheapo and try Koodo. Big mistake! I don’t know why I nickel and dime this as it’s rally not a lot of money every month but it just burns my a$$. I am now considering getting another US plan with North America wide calling at a competitive rate. Lucky for me I have a US address. The only issue is I will have a Pennsylvania phone number so anyone who calls me in Oakville will be long distance. I don’t care as this will be for personal use only and my other business phone they can still call as it is local. Or I could just wait until the CRTC caves in and lets competition rule the land. Oh Crap what am I saying this is Canada land of the lefties. Well one can always dream!

#95 Ret on 06.28.13 at 10:10 am

#50 D. Trump- Municipal pensions

I have often wondered if a judge would order a bankrupt Canadian municipality to raise property taxes in order to pay municipal pensions. What is playing out in the US courts could be very interesting.

Hamilton’s police chief makes about $90,000 a year more than both the police chiefs in Detroit and Cincinnati. More crime in Hamilton?

The thriving not metropolis of Hamilton has 2 or 3 former police chiefs currently all collecting $120,000+ pensions. Things are much the same at the firehall and with key city managers.

http://www.wcpo.com/dpp/news/region_central_cincinnati/downtown/chief-james-craig-accepts-job-as-compensation-package-still-being-worked-out

Detroit police officer salaries here:
http://www.police-officer-pages.com/detroitpolicesalary.html#axzz2XWHnLp7R

#96 brainsail on 06.28.13 at 10:12 am

#62 gold is for pirates on 06.28.13 at 1:04 am

“Modern computer chips manufactured after 1998 have very little gold content in them because most CPU’s no longer use solid gold wire bonding technology or gold-plated lids in their packaging.”

“For example, the Intel Pentium 4 Microprocessor came in an organic (non ceramic) package with a nickle-plated copper lid, & it did not use gold wire internally to attach the silicon chip to it’s package. It’s only noticeable gold content came from it’s connector pins that were thinly gold-plated. However, the pins were gold-plated to a thickness of only 0.76 microns – that calculates to just around a few cents worth of gold value per CPU.”

http://www.chipsetc.com/gold-value-in-computer-chips.html

#97 gotthardbahn on 06.28.13 at 10:15 am

‘…You bullion bunnies …’

Once again – nice try, Garth.

I am NOT a bullion bunny.

I am a non-funny money bunny.

Twenty years in the Canadian fixed income markets taught me a thing or two.

#98 mel in victoria on 06.28.13 at 10:30 am

Boys and girls……we have blast off!!

#99 TurnerNation on 06.28.13 at 10:35 am

I thought that place was a coffee shop. Scotia Macatta, Mercatto or something.
You mean I can exchange perfectly usable cash into rocks? Glee.

And croissants. — Garth

#100 Rational Optimist on 06.28.13 at 10:37 am

#62 gold is for pirates on 06.28.13 at 1:04 am

Gold is not the best conductor. It is highly-conductive, but less so than copper. It is very resistant corrosion, which is a strong advantage, and it is extremely malleable and has a low melting point.

About 10% of gold production goes to industrial uses. It does not have a high intrinsic value, perhaps not a lot more than copper, which is useful for all kinds of things.

#101 Burnt Norton on 06.28.13 at 10:40 am

#93 From Mississauga with Love on 06.28.13 at 9:51 am

You wrote:
“INdians pack multiple families and will rent basement and even a room on the second floor to afford the mortgage.
Now, the white areas (Lakeshore, Clarkson, Mineola), yes a different story. They will get hit.
But INdian areas, forget about it. I have seen it all too often. They will raise the prices then sell at less to make each other think they are getting a good deal. THat’s how they think.”

Sounds like you think that you are an expert on how people from different ethnicities think and act. Bravo.

Take it from someone who is born and raised in the epicenter of Canadian racial divide vis a vis real estate valuation, xenophobia, entitlement and resentful NIMBYism. I’ve lived it for 40 years, had dad blame it for his temporary unemployment in the 80′s and our family accepting a Christmas hamper from the goodwill. Your apparent line of thinking will simply breed more bitterness and malcontent.

Spend more effort cultivating curiosity, love and acceptance. Resist the temptation to stereotype and generalize as a means of assuaging self-doubt, fear and resentment. That is the path to a peaceful heart.

#102 JimH on 06.28.13 at 10:50 am

#88 brainsail
“Will BBRY recover?”
===================================
Tough to miss by $0.20 with so much riding on the Q10.
After all the March 2013 hype, the Q10 isn’t making much of an impression with the iPhone/Android crowd, and sales are pretty abysmal.
BlackBerry users are a loyal bunch, but it’s all about growth in a market that has become more and more competitive, especially among demanding users in the finance/legal/investment pofessions.
If today’s dump can’t attract the dip-buyers and the stock slides further, I wouldn’t be surprised to see a takeover bid before year end.
Just my $.02

#103 Canadian Watchdog on 06.28.13 at 10:50 am

Here comes the next leg down for S&P. Chart The margin clerks are in control now.

Sell that gold yet? Pity. — Garth

#104 Spiltbongwater on 06.28.13 at 10:54 am

Tragically occurred with a child in the GTA this week. — Garth

Garth, do you think the government should require parents or caregivers to pass a series of skill testing questions in order to look after children? Questions that could be asked:

Do you think it is ok to leave your child or a child you are looking after unattended in a locked vehicle for any period of time? [ ] Yes, [ ] No

Do you think it is ok to leave your child or a child you are looking after unattended in a bathtub, swimming pool or any body of water even for a second to grab the phone? [ ] Yes, [ ] No

We have to prove competency in order to get a drivers license. We have to prove competency in order to operate water craft. Somehow we don’t need any govenment license to look after children.

#105 WhiteKat on 06.28.13 at 11:04 am

I hope that picture is not of the actual bulldog that was pulled out of a car this week in Ottawa, and whose owner was charged.

Does this one not look happy? — Garth

#106 Basil Fawlty on 06.28.13 at 11:04 am

Not my forecast, but the consensus opinion – among the non-fringe set. — Garth

Would The Bernank be part of the non-fringe set? He was the alchemist that told us there was no housing bubble in 2007.
Sounds to me like you have been brainwashed by a Vulcan Mind Meld.

Why is that anyone who disagrees with you is wrong, or ‘brainwashed’? You sound more desperate than usual. — Garth

#107 Sebee on 06.28.13 at 11:13 am

We can’t afford to lose any more RIM jobs! :-)

#108 JimH on 06.28.13 at 11:19 am

#103 Canadian Watchdog
“Here comes the next leg down for S&P. The margin clerks are in control now.”
===================================
Always a good idea to get as many handles on where we’ve come from as possible before being too confident on where we’re going. Suggest you take a peek at time frames besides a 3 month daily. Try a 150 week weekly, for example, just to verify your prognostication???

It gives another perspective on trends for that “next leg down”. Don’t you agree?

#109 zeeman1 on 06.28.13 at 11:27 am

#21 Smoking Man.

Best post of the month, dude, and exactly what I’ve been thinking.

Are we in a post fundamental world?

“Post Fundamental”

Cool.

#110 Dupcheck on 06.28.13 at 11:34 am

The indicator that the economy is coming back is when there are no more Gold/Cash commercials as we currently are observing. Bring me your gold and i give you cash$$$ oh yeahhhhhh….ridiculous. Just as Garth keeps saying, the markets are back (US for sure) and liquidity is key.

#111 :):( Ying Yang on 06.28.13 at 11:42 am

#101 Burnt Norton on 06.28.13 at 10:40 am
#93 From Mississauga with Love on 06.28.13 at 9:51 am
You wrote:
“Indians pack multiple families and will rent basement and even a room on the second floor to afford the mortgage. Now, the white areas (Lakeshore, Clarkson, Mineola), yes a different story. They will get hit.
But INdian areas, forget about it. I have seen it all too often. They will raise the prices then sell at less to make each other think they are getting a good deal. THat’s how they think.”

I am of Asia heritage (Hong Kong), and I have to agree with #93 what he says is very true. When I first came to Canada we lived in Brampton where I had an Indian landlord who rented out this large palatial two story Mansion in the North East end. There were three families living in this home including ours. There was constant bickering between the landlord and the two other families, here is the best part they were part of him own extended family. Since I majored in English in Hong Kong I was the only person in the entire home that actually could converse in English. In broken English one of the family members told me basically the same story that his cousin had raised the rent and discounted it back so they received a deal. He told me in his culture if you don’t get a deal then there is no contract. I tried to explain that he was paying more money to him, all he said to me was “I got deal” so I win. The landlord then increased our rent and we said goodbye. The funny thing is we were all immigrants but they thought that we would never fit in to the area. They were right we love Canada as our new home, they love Canada as a income provider!

Let’s ditch this meaningless jabber. — Garth

#112 Doug in London on 06.28.13 at 12:02 pm

11 Rona stores closing you say? I believe that figure, as one of them is here in London. Meanwhile, there’s still talk of developing a big parcel of land in the south end for even more retail space. Has city council gone mad approving something like that?

Mr. Nenshi, I know you’ve really got your hands full dealing with the flooding in Calgary (and you sure didn’t need that railway bridge collapse either) but when life gets back to normal could we interest you in a job here in London? We could sure use some good leadership here.

#113 Incubus on 06.28.13 at 12:05 pm

This guy sees gold @ $8000 and silver @ $200

http://investglobe.wordpress.com/2013/06/26/quest-ce-qui-fait-descendre-lor-sinon-que-les-ventes-a-decouvert-de-banques-centrales/

#114 Inglorious Investor on 06.28.13 at 12:32 pm

Several months ago (before the collapse in gold) I casually predicted gold could go to $1200/oz in 2013. Well, half way into the year and we’re there.

Could it go much lower? Of course. Don’t forget that only ten years ago gold was under $400. And, if I am correct, the long-term average price for gold is around $450 (if using an average price for gold in the volatile, inflation-ridden, post-1971 world even makes sense).

However, when you start to see predictions of $800 an oz. or some other such figment figures, you know the biggest move is probably done. (Remember whens some analysts were predicting Apple stock would go to $1,000?) It’s a sign of capitulation.

I believe gold will go much higher than $1900 in the years ahead, but I also know you can’t predict the future or time it right. Anyone who puts most of their net worth into gold (or any asset) is always a fool. But you won’t go wrong holding some gold as insurance, not an investment. That is, unless you believe that after thousands of years, where gold was often used as money, as a store of value, and coveted by every civilization in history, you now believe humanity is suddenly going to shun gold. If you do, then YOU are the real doomers often derided on this blog, because the only way gold will not be coveted by we humans is if all we will be thinking about is food, shelter, and protecting our meager possessions from gangs, neighbours and whatever criminal government there may be.

It looks like a deflationary credit crunch, centred in China lately, is causing a dash for cash, and driving up the US dollar. However, growth in the M1 money stock is also contracting (last I checked) and velocity continues to drag lower––to the chagrin of the Beard@TheFed.

Anyone who thinks the Fed is seriously going to taper or exit ZIRP, or some other such nonsense needs a reality check. It ain’t gonna happen, at least on in any meaningful way–especially not during a deflationary credit crunch that would destroy the banks if bond prices drop too far.

As for Canada, we should especially be concerned with what’s happening lately. A rising US dollar means higher costs here, especially for gasoline and food. Couple that with lack-luster economic growth (e.g. exports), too much personal debt, rising mortgage rates…

Perhaps those who took my advice to sell their homes and move to the States (cashing in on perhaps the biggest arbitrage opportunity of their lives) made the right move.

#115 bigrider on 06.28.13 at 12:36 pm

#90 Peter-

I am glad you enjoyed the reference to Woodbridge as the epicentre of everything real estate. Remax is a church of some kind to most who reside there. Builders are living Gods.

No joke, a young man ,mid thirties whom I know reasonably well, who lives in a semi detached at Major Mackenzie and Islington, told me that the subway extension to Hwy7 and Jane will increase the value of his semi.

I told him that he would need to take a helicopter from his home to get to it, so why the value increase proposition?

Anyway, this is the thinking of the average Joe in that town.

#116 Canadian Watchdog on 06.28.13 at 12:54 pm

#108 JimH

A weekly chart would hide important short-term signals that I look for. One being which market is selling (US, Europe or Asia) and what time of day. I didn't label it on that chart but most of the selling is happening between 11:00am EST into the close, which is after European markets and the Fed/BoC's reverse repo operations. This implies large US investors are taking advantage of incoming morning volume and selling off into the close.

With margin debt at historic highs (now over 2.5% of GDP), you can be sure that somewhere approaching S&P's 1500 bound, there will be margin calls leading investors to scramble for cash to cover. That's when it gets ugly.

#117 Oliver Betz on 06.28.13 at 1:00 pm

“This guy sees gold @ $8000 and silver @ $200″

I see stupid people…

#118 Blacksheep on 06.28.13 at 1:01 pm

#2, the money multipher is toast do to the end of cheap energy.
Gold is now for central banks, single digit silver is were it’s at. Allocate some funds you can forget about and just buy bullion.

#119 TS on 06.28.13 at 1:09 pm

Noticed 10 year rates at TD went from 3.69 to 4.29 this week. And $800 an oz is a good price for gold. Unfortunately 75% of rhe gold miners cant make money at that price. Should make for interesting times.
Kilt.

The 10-year was a great deal. Hope many took the bait. — Garth

In your theory, 10-years should be in double digits. Then what was the bait?

I have no idea what the question means. — Garth

#120 Canadian Watchdog on 06.28.13 at 1:18 pm

Here's your gold and silver buy indicator courtesy of CNBC Muppets & Co. Link

#121 Basil Fawlty on 06.28.13 at 1:29 pm

“Why is that anyone who disagrees with you is wrong, or ‘brainwashed’? You sound more desperate than usual. — Garth”

I thought anyone who disagreed with you was a nutjob, wacko, doomer, metalhead, fringer, or just plain funny looking. However, it is all opinions really and I just disagree with your opinion on the second coming of the US economy. Desperate? No, just an economics junkie.

#122 Donald Trump on 06.28.13 at 2:10 pm

#95 Ret on 06.28.13 at 10:10 am

#50 D. Trump- Municipal pensions

I have often wondered if a judge would order a bankrupt Canadian municipality to raise property taxes in order to pay municipal pensions. What is playing out in the US courts could be very interesting.

====================================

Here’s another quote:

” As Detroit’s tax base hollowed out over the last decade, it failed to rein in its retirement system accordingly. Legacy costs involving pension and healthcare benefits consumed 39 percent of city revenue last year and are on pace to absorb more than half of revenue in 2014. This is the essential problem of the defined benefit pension model — the automatic contractual increase in benefits make them almost impossible to restrain. ”

MY view is that the U.S. is our crystal ball.
The US is hitting the wall.

Re a judge ordering a tax raise ? ….maybe in theory….but I doubt it in reality. Can’t get blood out of a stone. I think the citizens would revolt at a judge(a civil servant) rubbing salt into the wound. A bankrupt City would likely be one that has believed in the ” Taxpayer =Golden Goose ” too long.

I am not saying that Civil servants should be paid minimum wage…but we taxpayers are not the Gold Plated version of the Salvation Army. It tends to be a monopoly, who sets the pays scales? More often its gutless leftie Councils that seek peace at our expense.

The old trade-off was Gov’t job was secure, but paid less…aka private sector less secure, but paid more. Now its Gov’t sector is secure, paid more than private sector ?????, retire at 55….where now we hear that people in the private sector have stagnant wages, higher cost of living and cannot afford to retire.

What I am seeing is major empire building at City Halls…more civil servants engaged in more frivolous projects, a harbinger to Communism

Something is seriously wrong. I guess the $64,000 question is….what shape are are own Local Gov’ts with respect to this pension issue…is the matter creeping up toward some judgement day and reality check like Detroit?

#123 AK on 06.28.13 at 2:17 pm

#119 TS on 06.28.13 at 1:09 pm
“And $800 an oz is a good price for gold. Unfortunately 75% of rhe gold miners cant make money at that price. Should make for interesting times.
Kilt.
——————————————————————–
Both Barrick and Goldcorp have several mines where the average cost is @ $250.00. Guess where these mines are located? That’s correct: NORTH AMERICA.

Once they stop paying bribes to these other bush league backwoods countries, their average cost will come down.

#124 AK on 06.28.13 at 2:26 pm

#56 Tony on 06.28.13 at 12:24 am

“All Bernanke and the Fed’s lies backfired on them. As America does down the drain we are led to believe in some fictitious recovery and non-existent real estate recovery. Thus interest rates soared when in reality they should have fallen. They had to downgrade the GDP to 1.8 percent and needless to say the June job figure will show something around 50,000 job gains or less. Maybe even job losses.”
——————————————————————–

Hey Tony,

How about that, Bud.

American people are buying houses, cars and visiting Las Vegas, Baby, in record numbers.

Get ready for a blockbuster jobs report coming up. One of the next 3 will announce a whopping number that will blow your mind.

#125 AK on 06.28.13 at 2:31 pm

#83 Basil Fawlty on 06.28.13 at 8:24 am
“Marc Faber says; “QE99, here we come”.
——————————————————————–

Marc Faber needs to change that pinc tie.

#126 gold is for pirates on 06.28.13 at 2:39 pm

# 86 Captain Critical
“NOT true. Copper is the best conductor. Gold is used in electronics for contacts because it does not oxidize and compromise the electrical connection.”

My bad, I should have said, “gold is the most EFFICIENT conductor”. My point is still the same though. If copper were the best conductor for use in electronics, it would be used in place of gold in electronics, would it not? I am by no means a goldbug, I am an investor and as such looking to see if there is a viable future for gold if prices drop to the $800/oz level.

#127 Holy Crap Where's The Tylenol on 06.28.13 at 2:40 pm

Did anyone short BBRY?
Holy Crap! I was in long and large up until mid May and finally caved at the behest of my brother. I did make some copious quantities of cash since last fall. Now looking for more tax havens. I have been following it ever since and some of my old fart friends are still in it for the ride. They are stalwart investors with faces of stone. I keep telling them to come and play some poker. They are retired and I am semi retired thus the difference. I am still running a company and making money whilst they are enjoying retirement spending money.

#128 Brian on 06.28.13 at 2:44 pm

Go into Home Depot and look at the BBQs – hard pressed to find one under $500 and lots in the $1000 – $2000 range – lots of people looking too. Really? $1500 for a BBQ?

How many people can actually afford to pay that? If you make $175K+ and have your finances in good shape OK (how many people is that?) – anyone else – it has to be debt.

And RONA’s sales have tanked? You dont’ say!

#129 WhiteKat on 06.28.13 at 3:15 pm

Re #105

Garth,

I’m happy he’s happy!

#130 WhiteKat on 06.28.13 at 3:21 pm

#94 Holy Crap Where’s the Tylenol

Have you been sending your FBARs annually to the US Treasury?

#131 brainsail on 06.28.13 at 3:34 pm

#126 gold is for pirates on 06.28.13 at 2:39 pm

You may have not read my response at #96.

Cheers

#132 angela on 06.28.13 at 3:57 pm

Only a fool would not take profits. Then again, fools laugh at anything. — Garth

so when should we take profits in the stock market?

I dealt with that before the recent dip. You missed it? — Garth

#133 Unpoovvio on 06.28.13 at 4:09 pm

This is only anecdotal, but I can tell you that every time in the past half-year that I’ve stepped into Lowes/Rona/HD in the Woodbridge area they are all usually very slow or dead.

#134 Holy Crap Where's The Tylenol on 06.28.13 at 4:15 pm

#130 WhiteKat on 06.28.13 at 3:21 pm
#94 Holy Crap Where’s the Tylenol
Have you been sending your FBARs annually to the US Treasury?
Shush!!!! But doesn’t matter I’m still a Canadian and was invested in Canada not America.

#135 Bill Gable on 06.28.13 at 4:16 pm

Today’s post is a classic.

I will never look at Donkeys the same.

#136 Holy Crap Where's The Tylenol on 06.28.13 at 4:21 pm

I’m taking all my toys home cause you want to take my best toys and share them. Sounds like five year olds in the Telecom business. Go Team Verizon!

http://money.ca.msn.com/investing/news/breaking-news/canada-to-review-all-wireless-spectrum-transfer-deals

#137 Craig on 06.28.13 at 5:01 pm

I can’t believe that people here actually think the US economy is on the rise, heading back to a healthy, robust machine again.

There are more US cities, Municipalities and entire states that are on the brink of bankruptcy!

Who is going to bail them out?

Where is that money coming from?

Gov’t employees and Gov’t pensioner’s make up a large % of the US economy and what will happen when their paychecks disappear OR the US Gov’t chimes in and antes up more $$Trillions of $US to cover those salaries / pensions?

Detroit is up 14%

Gimme a break.

They’re selling homes there based on the taxes owned and nothing more. Lets try to keep this real.

Rona is the worst store I’ve ever been to and should have been moth balled years ago. Nothing to do with real estate.

Same as RIM BB 10. Its crap and will not survive. They will be bankrupt in 2 years if not sooner. Another Nortel in the making. Do we blame that on real estate as well?

The markets collapse just on the hint of trimming back the Q’s, never mind ending them! What does that tell you about the TRUE stability of the US stock markets?

Not much and like I said the Q’s will never end as their debt only mounts.

When that house of cards collapses, we all lose and I plan on being fully un-invested (in cash) in Sept.

It rained today = no house sales

YEAHHHHHHHHHHHH

#138 happity on 06.28.13 at 5:02 pm

“The yellow stuff dipped under $1,200 an ounce Thursday night, hitting a three-year low amid the latest news showing the US is irrefutably on the mend.”

The price of gold rose WITH and faster than the stock market and US economy for years when there was no indicator of potential financial turmoil up until the 2008 crash, so dropping gold is NOT an indicator of your proclaimed US Economic Renaissance.

#139 WhiteKat on 06.28.13 at 5:08 pm

@#136 HolyCrapWhere’sTheTylenol

I hope you are a ‘born in Canada’ Canadian, otherwise the banks (thanks to FATCA) will soon be reporting your bank accounts to the IRS on your behalf so that the IRS can compare your account balances to the balances on the FBARS you haven’t been filing.

IRS is salivating at all the penalties they will be able to assess for non-reporting of ‘foreign’ accounts. Non-reporting penalty per bank account is 50% of the value of the account up to a maximum of $100,000 per account.

#140 WhiteKat on 06.28.13 at 5:17 pm

@HolyCrapyWhere’sTheTylenol,

The banks doing the reporting to the IRS, are the Canadian banks by the way(and all other financial institutions in the world). Even though you may live and bank in Canada, your Canadian bank accounts are ‘foreign’ to the IRS.

Also be careful what you tell ‘the nice lady at the bank’ because if she has hears anything about your ‘US connection’ you may have to prove your non-US person status in order to avoid being reported. ‘US persons’ are: people with US birthplace (regardless of other citizenship, regardless if they left US as children), greencardholders who have not formally given up their greencard, and snowbirds who stay to long in the US.

#141 Macrath on 06.28.13 at 5:18 pm

#132 angela

The highlights from the June 2 blog

“But meanwhile, some stock markets are also at their high-water mark. Bond prices, too.”

“Does this chart suggest US stock values will fall? Of course it does. And they will. A correction of 5-10% seems like a given,”

“Lately that means harvesting large cap stock gains, reducing real estate exposure or moving money into under-performers, like small companies or emerging markets ETFs.”

http://www.greaterfool.ca/2013/06/02/fear-greed-risk/

#142 Bill on 06.28.13 at 5:24 pm

#61 KommyKim on 06.28.13 at 12:47 am
RE: #40 Yitzhak Rabin on 06.27.13 at 10:49 pm
Most gold mines produce an ounce for over $1,200.

That would mean that there was no profit in mining gold prior to 2010. Sounds a little ridiculous don’t you think?

——————————————

Gold is a finite resource. Exploration costs have soared as have the costs associated with digging it out of the ground. At current prices production at many mines will halt putting a damper on supply. Gold is being dumped right now like it is a company doomed to go bankrupt. Gold is not going to zero. Gold has been a currency and/or a storage of wealth for thousands of years. Nothing has changed this fact nor will change it in our life times.

I liked it at ~$1500. I love it at ~$1200.

At this point it is certainly worth waiting for a defined bottom. When short sellers dump 1-2 months of yearly gold production in one day that’s a trend you don’t want to get in the way of. Yes that’s what happened a couple months ago when (paper) gold dropped from the 1500′s into the 1400′s. The equivalent of 1-2 months production was sold in one day. Does a smart investor sell something that’s trading relatively stably all at once?

Yesterday the gold miners ETF (GDX) advanced ~2% while the gold ETF (GLD) declined. This pretty well never happens. There is very strong correlation between the two. Why would anyone buy the gold miners when the price of their product declines? GDX popped very nicely today as well, although so did GLD. Something to watch anyway.

#143 NorthOf49 on 06.28.13 at 5:36 pm

Its chillin’ alright, especially in the Hamilton-Burlington area. Regardless of what the local rag The Spectator is pumping:

http://www.thespec.com/news-story/3850173-toronto-media-waking-up-to-hamilton-s-real-estate-boom/

There’s still a lot of this happening:

Was: $1,225,000
http://www.bp-homes.ca/FeatureSheets/16Tews.pdf

Now: $899,997
http://hamilton.kijiji.ca/c-real-estate-houses-for-sale-16-TEWS-Lane-W0QQAdIdZ498873732

Do booms coincide with 26.5% price haircuts? Not sure, depends on what world you live in. There’s the fake world invented by the RAHB and The Spectator, or there’s the real world defined by RE speculators taking it on the chin. Take a drive along Lakeshore (aka Fakeshore) Dr. in Burlington and Oakville and witness the tall summer grass growing around the empty multi-million dollar spec homes and builder lots.

#144 Victor V on 06.28.13 at 5:38 pm

RBC to hike mortgage rates on Tuesday

http://business.financialpost.com/2013/06/28/rbc-to-hike-mortgage-rates-on-tuesday/?__lsa=3b59-bfa8

TORONTO — Royal Bank of Canada is once again boosting some of its home mortgage rates effective Tuesday.

The increases will range from one-tenth to three-tenths of a point, depending on the type of mortgage.

Royal Bank says its special discounted four-, five-, seven-, and ten-year rates are going up to 3.39, 3.69, 3.99 and 4.29% respectively.

Royal increased some of its mortgage rates earlier this month following a plunge in bond prices in May.

Scotiabank and TD Bank have also recently increased their special discounted rates.

#145 Canadian Watchdog on 06.28.13 at 5:51 pm

#137 Craig

I can’t believe that people here actually think the US economy is on the rise, heading back to a healthy, robust machine again.

You either believe i) government statistics, who have an interest to maintain whatever public confidence is left to get re-elected or ii) statistics from the private sector who are suffering from red tape or iii) global pension funds whose fuduciary duty it is to protect $30 trillion of private wealth. You be the judge.

CFIB Small Business Barometer (Canada)

Intuit Small Business Revenue Index (USA)

Billion Prices Project vs BLS CPI vs US 10 yr Bond Yield

Make no mistake. The government will do anything in its power to prevent the economy from falling into another crisis, and I mean anything.

#146 jess on 06.28.13 at 5:56 pm

….man “creative” use of water soluble chalk

http://www.truth-out.org/buzzflash/commentary/item/18058-san-diego-judge-puts-unprecedented-gag-order-on-sidewalk-chalk-protestor-trial

#147 Donald Trump on 06.28.13 at 5:59 pm

#128 Brian on 06.28.13 at 2:44 pm

I say keep on open eye “curb hunting”

Yesterday, as I was driving, person left out at the curb a fully functional (a bit rusty) wheelbarrow..actually built added strength..2 new rolls of tar paper, unused roll of chicken wire.

Hey no PST and GST…

#148 Shirley on 06.28.13 at 6:08 pm

Everyone in Vancouver is doomed. Major slaughter on values coming real soon. They’ve already shown up as a matter of fact.

#149 happity on 06.28.13 at 6:13 pm

Gee, only one out of three of my comments were published, not surprising when others are saying similar things.

This was the worst month in stocks for 8 months, so where is that US Economic Renaissance? Meanwhile silver went up 6%, of all days on a Friday and the last trading day of the month.

“bullion-lickers”

Awe, is that a hint of envy?

Why would I post three of your comments which ‘said similar things’? — Garth

.

#150 Canadian Watchdog on 06.28.13 at 6:14 pm

Stocks dumped on the close. Why? Because smart money knew Monday may see a massive sell off from this.

You lose more creds with every alarmist post. — Garth

#151 jess on 06.28.13 at 6:21 pm

Thursday, June 27, 2013
Statement by Celeste Meiffren, OSPIRG’s Consumer and Taxpayer Advocate, regarding the passage of House Bill 2460B through the Oregon House and Senate.

“Today, Oregon took an important step toward ending offshore tax haven abuse with the passage of House Bill 2460B.

“When companies use offshore tax havens to avoid paying their taxes, the rest of us pick up the tab with cuts to public priorities or higher taxes. These loopholes put small businesses at a competitive disadvantage and undermine public confidence in our tax system.

“OSPIRG research estimates that Oregon’s state budget loses an estimated $283 million in annual revenue as a result of the abuse of offshore tax havens by multinational corporations.* By treating income that companies list in offshore tax havens as domestic income, House Bill 2460B begins to tackle this problem and will keep an estimated $18 million in Oregon in 2014, and more in future years.*
http://ospirg.org/news/orp/oregon-legislature-passes-bill-cut-offshore-tax-haven-abuse

=================

#152 jess on 06.28.13 at 7:08 pm

S.E.C. to Require Admissions of Guilt
In some settlement cases, the Securities and Exchange Commission will now demand that defendants go beyond the current “neither admit nor deny” standard

http://www.guardian.co.uk/business/2013/jun/28/angela-merkel-anglo-irish-bank-scandal

#153 Tony on 06.28.13 at 7:52 pm

Re: #150 Canadian Watchdog on 06.28.13 at 6:14 pm

Traders who trade by the month bought back both gold and silver to lock in big profits for the month. The total morons bought both gold and silver today. They’ll get probably a last chance to sell at a profit when the June unemployment figures come out. Hint it’ll be just like the GDP on the absolute lowest side while not causing a panic. Huge rally in long term bonds that day.

#154 The Man From Nantucket on 06.28.13 at 11:01 pm

# 86 Captain Critical
#126 gold is for pirates on 06.28.13

RE: gold and copper

I just pulled a “research paper” from University of Google’s vast libraries.

Silver actually has lower resistivity than copper or gold.

They all have their industrial purpose.

#155 Steven on 06.29.13 at 8:52 am

Market prices for gold and silver are manipulated, wrong and therefore invalid. Don’t worry about current price, get the ounces!

#156 drydock on 06.29.13 at 12:48 pm

Silver is the best conductor, are you people religious cultists?