The dip

What do an ounce of silver and a condo in Toronto or Vancouver have in common? Lots. Too much. Both are sexy. People covet them. They’re easy to buy. Simple to finance. They breed speculation. They bubble. They pop. And the last guy in is always the greater fool.

It’s happened again, as you know.  Just as the Canadian real estate market starts its ugly descent – as I’ve chronicled so far this week – commodities have taken a dump. The timing could hardly be worse for those people who bought houses without money over the last two years. Canada is all about commodities, after all.

Yesterday oil prices sunk 10%, the dollar swooned, resource stocks were clobbered, gold plunged and silver was slaughtered. In fact, the white metal has lost a quarter of its value in a single week. Those investors mauled the worst were the ones who piled on in the last few weeks and months as silver was wobbling higher. You know who – the people who came to this blog, read the comments posted by the metalheads, and jumped into a sure thing.

More evidence that people buy rising assets and sell declining ones. And why you must run in the other direction.

In case you missed the memo, real estate’s also a commodity. What’s happening now – the most significant selloff in two years, since the financial crisis – is sure worth paying attention to. A massive amount of borrowed money is being squeezed out of the system, with the potential to erase economic growth and make anyone with a 95% mortgage have coffee coming out of their nose.

So why is this financial mess happening? Simply because financial markets – stocks, precious metals, commodity futures and the like – got seriously unglued from the real economy. The stupidity we’ve seen on this blog from the gold bunnies showed how greed and inexperience suckered in large numbers of people who bought for pure speculation. For the past few months I’ve told precious metals investors to take their profits, just as I’ve warned that stock markets were set to correct. This is the reason for having a balanced portfolio – ETFs instead of individual stocks, bonds (which are spiking), trusts and REITs for steady income as well as preferreds for yield and stability.

For the same reason, smart people keep their real estate in check – no more of total net worth than 90, less your age. That ship’s also sinking, but unlike silver, it’ll take months, not days, to lose a quarter of its value.

Why the carnage this week?

Like I said, the real economy reappeared to bite investors in the butt. The latest news out of Europe shows plunging factory orders and more debt; interest rates are rising in India, China and Brazil; Australian retail sales (and house prices) are plopping; US jobless claims are rising while real estate keeps falling; high energy prices have walloped consumers everywhere; and a dead Osama has cops with assault rifles riding the New York subway.

This is a giant reminder to anyone who didn’t change their ways after the 2008 crash that they might not dodge the next bullet. The fools among us may well be those who ‘buy the dips’ in precious metals or houses. The greatest fools will be those who use credit. The geniuses will be those who realize metal or bricks are unworthy. Instead, love liquidity.

This brings us to Andy. He is saved.

“Wanted to share my story with you and express my heart-felt gratitude . . .

Five years ago I decided to buy a condo in Vancouver.  I had a new job and a decent wage, but had only just finished paying off my student loans so I didn’t have any money.  Undeterred and encouraged by everyone around me, I borrowed 5% from my parents for a down payment and enlisted a mortgage broker to sell my soul . . . I asked him for $350K, but he then offered me $500K before I even filled out the forms.

I looked at condos non-stop for a few weeks and eventually purchased a great one. I felt like I had really accomplished something (thanks to all those pats on the back from fellow home-owners).  I was finally investing in my own future instead of wasting money on rent, just like my friends and family had coached.  Life was good!  Or so I thought.

As the years passed I began to realize exactly how buggered I really was.  The running total I was spending on principle plus interest was rising much faster than my property value; the longer I held my place, the greater the difference between the two.  Then real estate values dropped in 2007-2008 and I was stuck; unable to sell without losing my shirt, and spending more and more money on interest with each passing day.  Knowing I simply couldn’t sell until the market came back, I accepted my predicament and settled in for the long haul.  At least I was “doing the right thing” by owning a house, right?  As housing prices rose again following the Olympics, I began to wonder if/when it might be time to sell and get out of the market.  My gut said, “get out” but everyone around me said I’d be a fool if I did.  Peer pressure won, and I held on.

A friend of mine turned me onto your blog a few months ago and I have been glued to it ever since.  It was refreshing to read that the “invest in a house” pressure I had been subjected to my entire adult life may have been misplaced.  After a few weeks of reading your blog and I knew my gut feelings were right.  Armed with new confidence, I seized the opportunity to escape the housing market and haven’t looked back.  I packed, moved (into a rental), then staged and listed my place within 3 weeks.  After a grand total of 7 days on the market and only 3 showings, I received 2 offers above my already-inflated list price.  I accepted one of the offers and have never felt better.  I made it out alive!

When I consider all monies paid (down payment, interest, principle, strata fees, realty fees, etc.), I think the outcome is actually brighter than I could have hoped.  Now, don’t get me wrong – I didn’t make money . . . I simply lost less than I was expecting to, given the naïve way in which I entered the housing market (minimum down payment, inflated market prices, etc.).  I consider myself lucky to have escaped when I did, especially considering the inevitable real estate price drop we all know is coming.  Not to mention, I now find myself sitting on a lump sum of “forced savings” left over from the sale.  As I continue to read your blog, I look forward to hearing more advice of how to properly invest it!

Garth – you should market “Garth Saves” t-shirts . . . I’ll buy one.”


#1 mississaugasold on 05.05.11 at 9:15 pm

Excellent post. I am reading MONEY ROAD right now and am hooked. But I think I need more time to digest how to read the market and your ideas on where/how to invest.

Thanks again for the advice.

#2 Tim on 05.05.11 at 9:20 pm

Stocks tend to do well in the last two years of a Presidential term, as they are pulling out all of the stops. I’d be wary of selling in May this year…Besides, our psychopathic PM, despite his agenda to destroy many of the things Canadians fought for and reduce public involvement in the democratic process, will have a positive effect for stocks.

#3 ken s on 05.05.11 at 9:21 pm

Bravo Tom Mulcair for telling the pentagon
psyop crazies that Not Everybody has been dumbed down to their level. Psyops have a bottomless downside. Their elevator Never
reaches the basement of sloppy 2bit assinine
psychoprop. They do and say things which
would insult the intelligence of a dog training cockerspaniel
The bag of crap they have cooked up, has sprung a thousand leaks and changes every
few hours. Red blodded patriotism and spin
will carry you just so far.
Just How Dumbeddown do they think we
have become? Perhaps the only examples they have are their coworkers.
They will have their revenge of course, perhaps
by turning the heat down or up in Bradley Mannings torture cage.
The first step in the solution to anything is to
identify the problem. These people are a problem, and so are their supervisors and on
up to the poobahs who run the Collapsing Empire (and their minionDominion) Thanks Tom for avoiding the Tony Poodle label for us.

However the Poodles have whined their discomfort and regret. That is what we got
last Tuesday?
Go vist the Arctic, because it will be gone after
BP gets there. Poodles Like BP doggie treats.

Hanna Arendt was so right: These people are
Just BANAL. kenS la la etc

Is that rap? — Garth

#4 Mr. Lee on 05.05.11 at 9:23 pm

Here in Calgary we have lot of debt and a lot of arrogance. Let me tell you about the conversation I had with a college of mine that looks down on the homeless. To this man the homeless are next to scum and deserve their predicament. So I tell him the very same homeless person is a lot richer than he is so he should take heed. That took him over the top, WTF was the response. I analyzed his situation, he owes on the house, he owes on the sport import, he owes on the wife’s suv, he owes, he owes and he owes. So that homeless guy with out $20 dollars to his name is richer than the guy that owes because the homeless dude does not owe. But some refuse to see this, and to Garth’s point, the greed and near sighted thinking will do them in.

#5 Robert Dudek on 05.05.11 at 9:23 pm

Great time to buy CEF. Take profits when times are good, buy back in after the panic subsides. Easy peazy.

Gold bugs to arms – buy the dips!

#6 T.O. Bubble Boy on 05.05.11 at 9:24 pm

Maybe not a “Garth Saves” T-Shirt, but how about:

Got Garth?


Garth University?

#7 Steady Eddie on 05.05.11 at 9:24 pm


Garth, I started reading your blog when gold was at $900/oz, now it’s $1500/oz. Silver was $18/oz and is now $38/oz… PMs are 10 years into a 15-20 year bull cycle… paper is in a bear market….

What happened to the spectacular real estate collapse in Spring 2011. I’m still waiting…

Sold my townhouse, doubled my money in paper silver trade…. sold at $49/oz…

Living with mom and dad… I need to move downtown to be near gf and work…

Apocalypse Now!

#8 Jon B on 05.05.11 at 9:26 pm

I’d like to explore the concept of how the damage from the impending RE correction will influence the widening gulf between rich and poor. I think this subject is even more interesting than the RE story post 9/11. Will the decade-long lure of cheap money be a driving factor in significantly reducing the numbers of the middle class in the next decade? No doubt we are living in interesting times.

#9 dmc on 05.05.11 at 9:28 pm

Again, beware the real estate goon. What would you think if a guy told you demand for real estate is ‘definitely up’, then six months later sales are revealed to be at their worst levels in two decades!

#10 cendrine on 05.05.11 at 9:32 pm

Yeah, I’d buy a “Garth Saves” T-shirt….the irritation value to some of my relatives would be worth every penny.

I’ve been advocating selling now to some near and dear and was told “we can wait….real estate just keeps going up and up”. Um…OK…

#11 Kim on 05.05.11 at 9:51 pm

Geeez I would buy Ten T-shirts Garth. Your hot and you rock!!!!! xoxo kim

#12 45north on 05.05.11 at 9:51 pm

Now, don’t get me wrong – I didn’t make money . . . I simply lost less than I was expecting to,

Andy is lucky to get out

#13 Thetruth on 05.05.11 at 9:52 pm

#197 Jess Previous post,

Ban Trade??, we’re importing these values into Canada in record numbers!

When I was in India last year, i got the sense that people would laugh at stories such as these and would blame the boy’s family for not being aware. There, it’s every family for themselves and they will do whatever it takes to get ahead.

Welcome to Canada.

#14 Lynette on 05.05.11 at 9:53 pm


#15 Carp on 05.05.11 at 10:03 pm

Ottawa news:

Listings are up, friends are 1 month into selling a place that their neighbor sold in 7 days – great location, good townhome price, no offers so far. In Almyer, QC listing a super up and places are 6+ months on the market and not moving.

Realtors took my wife out to the spa to see if we are jumping back into the market. The lady admitted the market is slow this spring and whispered I may have right to sell at a lower price last December.

We shall see since I’m not jumping anywhere.

#16 Cool in the Interior on 05.05.11 at 10:10 pm

Whats your predictions for the interior small rural towns in BC Garth? Not many sales here too but houses are a lot cheaper. Even an expensive one is about $250K.

#17 e on 05.05.11 at 10:12 pm

Garth, silver and condos got nothing in common, silver to gold ratio is 1:16, we’ve got a long way to go- what we are seeing is pure manipulation. Once it’s all said and done we can easily see 6000/troy ounce gold to 400/ounce silver. Got nothing to do with price, what people don’t realise is, is that the same amount of gold that bought a litre of gasoline a hundred years ago still buys the same amount now (as an example)- the USD has no gold backing but rather is printed by private banks and therefore when lots is printed we’ll see so-called “increases in price” for bread, oil, etc…

Heck, Jim Rogers is buying it like they don’t make it anymore… err… they don’t.

Great blog btw, the only one of its kind.

Thank you. You’re delusional. — Garth

#18 Scott on 05.05.11 at 10:12 pm

$175k owing on a $185k basic townhouse just outside of Saskatoon (5% down 40 year comes due in 15 months). Mortgage + taxes + condo fees are equal to the equivalent in rent.

Should I pay the penalties and get out now or do you think I’m “safe” enough because I’m at the bottom of the market pricing? We would have kept renting but people were getting booted out of the rentals left and right around here (condo conversions and sales). We have a young family and didn’t want the surprises of moving every 6 months.

#19 Jimbo on 05.05.11 at 10:15 pm

In the 2008 deflationary meltdown, gold fell from a high of roughly US$1000 to a low of roughly US$750. In the same period, the US dollar rose from roughly par to roughly $1.30 against the Canadian dollar. So the two moved in equal and opposite directions.

The net result? Priced in Canadian dollars, gold held its value throughout the 2008 crisis.

The same thing is happening in the last few days. Gold down. US dollar up. Little change in gold when priced in Canadian dollars.

Gold is a good store of value in hyperinflation. But it is also a proven store of value in deflation because, unlike most other assets, it has no counter-party risk. Plus it is LIQUID; in late 2008, I sold most of my gold with one keystroke to buy oversold stocks.

I’ll happily continue to hold a portion of my nest-egg in gold bullion as part of a healthy, balanced portfolio because nobody knows what tomorrow will bring.

#20 shanks on 05.05.11 at 10:17 pm

Hey Garth,
if one of your readers was fortunate enough to be given 25K (who also has no other savings to speak of), rents of course, what would you suggest to said reader? Obviously, downpayment on a condo is not on the table ;)

ETFs, Pipe Lines, and other dividend paying stocks were recommended with the gift, but all of sudden towards the begining of this week said reader felt like he was coming down with the gold bug… albeit mostly in the form of rings, chains, and teeth.

aside from “buy the book!”, any advice?

#21 SMOKING MAN on 05.05.11 at 10:18 pm

They say you should never short, all the investment guru’s are on the same page……

Sorry but Im dyslexic and can’t read well so I missed the advise…..

Kids, when you short sell, and you are wrong side of the trade pain is limited, as things go up slowly. But when you short and you are on the right side of the trade, you make it so fast as falling prices move faster and further than upity ones.

I have made way more shorting….

Now if I could only figure out parenting, GOD I SUCK AT THAT

#22 Bill Grable on 05.05.11 at 10:24 pm

I had to share this with you fellow blog dawgs.

Honest to Harper – I am in line at a Supermarket in Vancouver. The guy in the express lane has two bananas.

Total = $0.64 cents = the guy puts it on his credit card!!

Holy Canoli.

#23 Utopia on 05.05.11 at 10:30 pm

#18 Scott said…..

$175k owing on a $185k basic townhouse just outside of Saskatoon (5% down 40 year comes due in 15 months). Should I pay the penalties and get out now or do you think I’m “safe” enough because I’m at the bottom of the market pricing.

Nobody can give you advice Scott. This is one you have got to figure out on your own. Consider though that just three short years ago you could have bought a modest single family home within 15 minutes of Saskatoon for a mere 50 or 60 grand.

How about this. The cost of owning in the Saskatoon region is roughly 2.5 times the cost of renting (see You might also consider that our prices in this city have appreciated almost more than anywhere else across the country, thus making us the most delusional of markets in the whole country. Some prices have nearly tripled in just a few short years.

But it’s different here. Everyone will tell you that. We are immune to downturns and have low unemployment numbers to prove it. Plus, we have Potash. We have oil, gas and Uranium too…….

Oh wait..aren’t those commodities? Hmmmm.

#24 e on 05.05.11 at 10:33 pm

I was only giving facts and my opinion- the possibility of 6000/troy ounce- is inevitable, save for some sort of manipulation… Read “The coming collapse of the dollar and how to profit from it” by James Turk and John Rubino.

Only, the manipulation can only go so far…

How much you want to bet silver goes through the roof by Christmas? I’ll bet you an ounce… of gold I mean…

#25 S.B. on 05.05.11 at 10:36 pm

After a few consecutive rate hikes people will be running around in fear. Suddenly, buying or holding that 600k vacation property will not seem like a good idea. Remember, as we saw with silver it does not take much to spook a market.

Even if 90% of people do not sell their RE, the 10% who are forced into selling by margin calls, job relocations, divorces – and the underwater speckers – will drive the market down.

#26 $froma$ia-The mother of all Bubbles on 05.05.11 at 10:45 pm

Easy there Garth… Commodities can retrace. It’s not all up, up and away.

Your comparrisons are byist as you are comparing leverage based assets (houses bought with stimulous) to assets that aren’t.

G20 will not stop printing money. If the US has no choice but Q2, Q3, the others will have to continue as well or currencies will also have violent moves in different directions against one another.

Give it a month then run yer mouth’….



#27 not 1st on 05.05.11 at 10:52 pm

Buy dividend bearing stocks, yes but with what? You need a million bucks clear cash to make 5 or 6K a month. Not all of us can expect Garth’s godly 15% return, which I point out is only achieved by the creme de la creme (read: top 1%) of brokers out there.

You have no idea what you’re talking about. Again. — Garth

#28 Samson on 05.05.11 at 10:54 pm

The point that Garth is making about silver, I think, is that speculation is speculation is speculation.

Silver. Corn. Granite & stainless. Whatever.

Speculation (without insurance) is generally based on the same routine: we buy a lump of something, we pray it goes up in value, and then if it does, we pat ourselves on the back for our financial wizardry.

Unfortunately, over the long run, the “something-for-nothing” approach to investing pretty much turns out the same way, time after time.


Because it doesn’t take any intelligence to speculate. But true wealth creation, though, that’s something else….

#29 Shaun on 05.05.11 at 10:57 pm

What a great story (not for the loss, the lesson) as people should take their heads all the way out and realize what is going on in the market. We sold our Condo last summer and good thing we did as the month after we sold it, it went down 20K. It’s even worse now and if we stayed we would have lost money. Thank God i didn’t listen to my statusy friends who think owning a home is better. We rent right now and as of May 2nd are 100% debt free. We have cash flow and I wouldn’t change that at all.

Thanks for a great blog Garth, it’s perfect!

#30 Mister Obvious on 05.05.11 at 11:04 pm

#22 Bill Grable:

Total = $0.64 cents = the guy puts it on his credit card!!

That’s par for the course here in Dumbcouver.

Ever see the movie “LA Story”? There’s a scene where Steve Martin drives to his next door neighbour’s house. He actually walks further than if he had not taken the car. Could just as easily have been la-la-land.

#31 Neo on 05.05.11 at 11:07 pm


Every time in history we have had negative real rates with respect to the Fed rate and inflation Gold bullion has risen. What exactly has changed the U.S. that would support lower Gold prices especially with all the money printing still going on and $1.5 trillion deficits as far as the eye can see.

I find it convienent you left out the fact that raising margins and the collateral damage of that is what has caused especially silver to fall. That is just temporary. You should know that. Scare away all the paper holders and highly leverage participants. But smart money is still holding on to their physically gold/silver. The only thing that will truly crash Gold/Silver is to once again but a value on fiat currency and that would be interest rate hikes. I’m not taking anything else seriously, it’s all just theatre to distract from what’s really going on.

#32 Sharpen The Saw on 05.05.11 at 11:11 pm

I’m set to buy pickle futures. Everyone likes pickles, no?

#33 City Slicker on 05.05.11 at 11:15 pm

I agree with the gold/silver people. Even if QE stops the damage is already been done and irreversable. $1650 gold in the short term, then sky is the limit long term.

The rumor on BNN a couple days ago was DGC.TO is a buyout target for Barrick. And TWD.V is their partner and seriously undervalued – surley worth looking at.

#34 TheBigLebowski on 05.05.11 at 11:18 pm

The fools among us may well be those who ‘buy the dips’ in precious metals or houses.

Garth, it would be much easier if you just wore a shirt that said on the front “A nickel will get any banker a full hour with me”.

#35 Hoof- Hearted on 05.05.11 at 11:18 pm

Yeah…..keep on the old Gold Bug BS

Cash out suckers…Like Garth says…..just another commodity.

Remember last years ” buy Silver ” call to F*ck over NY investment firms…..set them up? they don’t have enough reserves to cover their bets.

I hope they do go d-o-w-n…scumbags

#36 Junius on 05.05.11 at 11:19 pm

#21 Smoking Man,

Sometimes you can’t fight genetics.

#37 Devore on 05.05.11 at 11:25 pm

#22 Bill Grable

The guy in the express lane has two bananas.

Total = $0.64 cents = the guy puts it on his credit card!!

Holy Canoli.

Ok, and? Maybe he didn’t have (or want) change?

#38 Jim on 05.05.11 at 11:26 pm


#39 John on 05.05.11 at 11:35 pm

The best thing to happen this week. Bargain silver prices!!

Just got 250 maple leaves. A BIG thank you to the CME for slaughtering the sheep and murdering the prices. I will load up more if the carnage continues.

This is nothing short of a US economy meltdown. Now that Osama is “dead”, no one is left to be killed. Dollar devaluation to happen at an alarming rate. Housing and employment have only one way to go – down. QE in any form to be announced sometime in June. Never know the magician Ben Bernanke may surprise with an earlier date.

Off we go up from here with silver, gold and crude. Not much silver left before the explosion , Garth.

#40 Josh L on 05.05.11 at 11:39 pm

Was searching ETFs today for my wife’s TFSA. Saw a couple types I hadn’t seen before. An ETF for preferred shares and an ETF stacked with other ETFs. You just pick conservative, moderate or growth and it groups several for you to presumably create a balanced portfolio of equity and bond ETFs. Is it that easy? Or is there a reason to avoid or go straight to the source (buy prefereds direct).

#41 DML on 05.05.11 at 11:44 pm

Yes to the T-shirt,but lets go with:

Jesus Saves,
Garth Invests

#42 Josh L on 05.05.11 at 11:44 pm

#20 Shanks,
Buy the ETFS in a TFSA (tax free savings account). I asked Garth a question on preferred share ETFS and grouped ETFs. Wait for his confirmation if you like, but I think you could get a nice balance quite easily and be on the road to tax free money.

#43 Dave in Victoria on 05.05.11 at 11:45 pm

My sister has been looking at rentals in Victoria and she tells me that a number of landlords have told her that they are looking to list.

The PCS has been listing more duplex properties and such that seem like rental properties that investors are starting to unload.

Seems like smart investor money is starting to get out of real estate in Victoria…. that, and things aren’t moving. Listings below inflated 2011 assessments, even 2010 assessments in some cases are common, with still only a few changing hands.

#44 nonplused on 05.05.11 at 11:57 pm

Hey Garth, I think it’s a little disingenuous to dump on commodities every time they correct. Sure the silver correction is one for the record book, but it was way, way over bought. And yes, all the economic concerns you mention were in play, but the exchanges were also rapidly increasing margin requirements. This is no conspiracy, that is what they are supposed to do when price and volatility go up. Margin is supposed to provide a cushion such that the exchange can close you out if your bet goes wrong without the exchange going belly up. It makes no sense to let people buy silver (or anything else) at $50 with the same margin they had to post at $10. Especially since the rise has been parabolic. More margin was prudent.

If you have a margin account at a brokerage, online or not, they do this to you real time every day. You won’t notice if you aren’t using borrowed funds (i.e. posting margin), but if you have borrowed from your broker they are making you meet a margin requirement, and they calculate it daily. With commodities they post unit rates, under the idea that commodity prices never change, but they have been changing so the margin requirements went up.

That silver sold off as a result (amongst other things) indicates the speculative money wants to be long, and thus it was the longs that were squeezed out by the margin changes.

Silver is still above it’s 50 day average, which will provide support. It’s way above it’s 200 day moving average. The correction has been something to behold, but so was the rise. Most silver holders are still way up, and when the speculative money gets used to the new margin requirements, everything will balance out.

Comparing silver or any other commodity to housing only holds so long as one is talking about debt. The silver, gold, oil, and food stuff markets will likely be margin free one day (in other words you can’t use margin to buy it because the government wants no speculation). Housing, on the other hand, is a debt instrument, and it will be a cold day in hell, with a full zero lopped of housing prices, before it can be margin free.

#45 nonplused on 05.06.11 at 12:03 am

A further add to my previous post:

In housing, your equity = your posted margin. Dog help us if there is ever a margin call in housing.

#46 Dark Sad Monster Bunny on 05.06.11 at 12:10 am

21 Smokin’ man – because bunny cares:

#47 Nostradamus Le Mad Vlad on 05.06.11 at 12:20 am

“The timing could hardly be worse for those people who bought houses without money over the last two years. A massive amount of borrowed money is being squeezed out of the system, with the potential to erase economic growth . . .

All in good time, and TPTB have timed it quite nicely. What with WW3 looming on the horizon (they will continue funding both sides, receiving a 100% return on their investments from Halliburton, etc.), instigating Pakistan and China to team up with Russia, yessirree, next coupla years are looking mighty interesting.

“Why the carnage this week?” — And why the monsoon next week, then the waterfall after that? Bcoz what goes up etc. etc.

“This brings us to Andy. He is saved. (Mercy! The Ziegfield Follies be praised!). After a few weeks of reading your blog and I knew my gut feelings were right.”

Therein lies one main point: The gut feeling (intuition) is always right; people, sheeple, society, the establishment — mostly wrong.
Mag. 6.1 ‘quake near Fukushima; apparently no further damage to reactors.

China is miffed at the US for interfering in Pakistan.

Staged Event The cartoon-caption (not shown on this pic) is Clinton saying: “Maybe we should have turned on the laptops before we staged this photo.”

Links in. Silver — “If you think May is crazy… just wait for JUNE!” Then to Aug. / Sept. when Beethoven Rolls Over in his Grave!

Link in. Hawaii — 45K lightning strikes in 30 hours.

Links in. GG = Gadaffi and Gold. “It is an idea that would shift the economic balance of the world.” The invasion of Iraq was similar — Sadaam had already planned to switch from the US$ to the Euro.

Who Owns Canada? Ummm, I’ll let you guess! Link in.

The US Fed The sun will still rise without the US Fed.

The Good, The Bad and The Ugly or The Long and Short of it.

Nice Chart, but it’s still funny munny.

#48 Sea Wave on 05.06.11 at 12:21 am

Not all commodities are destined for the crapper, Garth! … “lean hogs” are back on the rise!! … I’m dumping my gold and going “all in” hogs!!!

Nothing says “post-recession recovery” quite like a rising lean hog-future …

#49 desperate wife from Fort Mac on 05.06.11 at 12:28 am

Yup, we are that Fort Mac shithole couple. My hubby is overpaid engineer (+165K), I am a desperate housewife running my own online biz another +100K. One 3 year old boy, another is on the way. We rent townhouse in this deadtown for $2800. We hate this place. His contract is up next month and with the 5 years worth heavy pockets we gonna head back to Van. My husband is ready to jump on a first realtor ASAP. I try to reason with him that it is the dumbest move we can make but he won’t listen. “Vancouver is special” he says. I can’t believe I married that littl shit. I have run out of arguments. help!

#50 West Coast on 05.06.11 at 12:30 am

When the Financial Stability Board was established a couple of years ago, it declared that one of its goals was to produce better “early warning” systems of looming financial trouble spots. Now it is starting to turn this rhetoric into reality. Investors should pay attention.

Last month, the FSB issued a small advisory report entitled “Potential financial stability issues arising from recent trends in Exchange-Traded Funds”. Unsurprisingly, this did not cause a storm. After all, ETFs seem as dull as ditchwater to most politicians; almost as boring as the world of CDOs (collateralised debt obligations) looked back before 2007.

#51 rental monkey on 05.06.11 at 12:31 am

Another idea for Garth t-shirts:


with a silohuetted pic of a dude on Harley. If you are poo pooing the idea of t-shirts, you can always send the profits to the national food banks. Me thinks that might be the only place numbers are going to be rising in the next few months/years. Whaddya say stud?

P.S. I’d buy one and proudly explain it’s source to the sheeple.

#52 Pat on 05.06.11 at 12:49 am

#225 The Original Dave wrote:
“A lot of times people come here and question Garth Turner’s motives.”

Really, people are that dumb?

#53 Mr. Reality on 05.06.11 at 12:53 am

#7 Steady Eddie on 05.05.11 at 9:24 pm

If you define success by still living with your parents good on ya. I prefer the opposite.

Mr. R.

#54 Kilt on 05.06.11 at 1:12 am

Get real Garth.

Gold is 5% off its all time record high. Over the last 10 years it has been an amazing investment. I predict gold will be 20% higher by this time next year (in US$)

Yes, silver was looking bubbly at $50.

Not a gold bug, but don’t mind trading it from time to time. But as long as there are heaps of gold bugs out there, it will go up.


#55 realpaul on 05.06.11 at 1:15 am

Not to put too fine a point on it…but if the market panicked you into selling this week… really should not be an investor. As any who have seen this before a billion times you could have been buying the dip……. and the evidence of that has dawned in Tokyo this morning (their time). By the time the Canadian investor will have woken up the gains will have been made…what happened? The market cycled on no news…..nothing changed fundamentally. Back to buisiness as usual…..ho humm. “Its the macro stupid.”

But Realpaul…….what does that mean? If I have to tell you……you should not be an investor.

#56 six-figure-renter on 05.06.11 at 1:23 am

hey GARTH. Quick question. What are preferred stocks and where can you get them?

Oh and great post

#57 BPOE on 05.06.11 at 1:27 am

The correction in Silver and Gold is OVER period end of story. Short 3 day correction and the upward march continues. Why do people continue to think commodities go up for ever without corrections and then when they drop there is a sky is falling mentality. Folks you buy up all the gold and silver you can and check back on this blog at Christmas time. You will be rewarded big time especially in gold. My target for $1500 gold by Easter was dead on (see previous blog posts). Folks gold is above $2000 by Easter 2012 mark my words. Any renters out there want to share how renting Vancouver was the best decsion of their life over the past 10 years compared to owning? Yeah I didn’t think so. Renting = Family Shame and Disgrace

#58 TaxHaven on 05.06.11 at 1:28 am

Re: gold, let me say this carefully…

I’m confident the Canadian dollar will eventually sink to 5,000-to-the-ounce. Yet I fervently hope that it takes several years for it to get there.

The paper dollar’s collapse against gold has so far been slow, serene, almost stately for some ten years now. There’s very little frothy speculative money in real physical bullion and that’s the way I hope it stays.

I think real estate prices, bond prices and stock prices are reaching ridiculous and unsustainable highs. Fixed-income yields from bonds, trusts & debt instruments are about to be washed away by inflation [or, more accurately, ‘stagflation’].

To be fair, the other side of this debate sees demand for liquid cash soaring as the indebted seek it in an effort to pay down their debts. But what is cash itself, if not a zero maturity debt instrument?

Well, I’m just betting that even if that does happen gold, as real money, is likely to be last man standing in any selloffs that occur.

And, BTW, I DID ‘buy’ two more ounces at US$1,535…

#59 C Rock on 05.06.11 at 1:33 am

I’m thinking “Garth Invests” bumper stickers. Black with gold leaf lettering, bling style dollar signs on each end and of course, web site address at the bottom.

Man I can see ’em now, plastered all over the hummer, Garth up front, smilin’ man Aah, beautiful.

#60 Blacksheep on 05.06.11 at 2:02 am

Falling knife theory applies in this PM correction.
Speculators are bailing and that’s fine.
Global Debt reached maximum saturation in 2008.
Fundamentals have not changed in the last week.

QE-3 is coming soon [Sept?] as the unstimulated economy starts showing it’s anemic self. [US EI claims bouncing already]


We will not be able to maintain our elevated living standard [compared to 2nd/3rd world countries] no matter how much we borrow or how many people work in a single household.

Garth doesn’t get why bunnies buy bullion.

The world is not about to end, but it is about to change a whole bunch.

Oh ya, none of this bodes well for RE.

take care

#61 Jody on 05.06.11 at 2:04 am

#24 e- I think if gold goes to even $3000 an ounce the world economy would have crashed by then and the mad max scenario would be playing out. Most people don’t realize just how close to economic disaster this planet is. Of course it never helps when governments the world over keep screwing their populations but what do people expect, the government to actually care about them? Hahahaha!!

Real estate in Calgary is currently in free fall, people can’t sell anything. 300 plus teachers getting laid off, nurses getting no more overtime, construction companies closing, SHAW laying off, no, everything is perfectly fine here, hahahaha! So many people in Calgary live on credit it isn’t funny. The people you see in shiny new Toyota’s, riding the Harley, taking 5 vacations a year, they’re all living it large on credit. No big oil jobs on the horizon. Now that Mr. Chuckles is prime minister more temp foreign workers will be let in so his buddies corporations can make more instead of paying decent wages. There will be no recovery, we are on our way to becoming a third world petrol state. There is no “trickle down,” of wealth, it’s getting concentrated into fewer and fewer hands. Henry Ford said that if thinking was easy then everybody would be doing it.

#62 Cato on 05.06.11 at 2:08 am

Leverage and market manipulation – its how wallstreet manages to earn billions in bonus’ when the real economy is in the tank. The jackals bled the sheep – isn’t the first time and won’t be the last. Most trades on the CME are just paper trading back and forth and have nothing to do with physical delivery. Most silver (or any commodity for that matter) being traded doesn’t actually exist in the real world.

I don’t like silver because what attracted the hunt brothers in the 70’s is likely attracting a few nefarious billionaires now – its just the right size to game and manipulate. Massive paper positions have been unwound yet try to buy physical and supply is tighter then ever. I smell a rat.

The great thing about hedge funds is most trade using debt, and the longer they sit in a winning position the greater the temptation to lever up with even more debt. So when trades finally start falling apart they need to liquidate which means they start throwing everything over the side, doesn’t matter what it is. Correction becomes a spiral and perhaps outright collapse bringing down house of cards on everyone. We saw it happen in 2009, hoping we see it again. Kind of doubt it this time around, too many large holders of USD are itching to diversify.

Gold is a different animal entirely, after shunning it for decades central banks have been buying behind the scenes. Mexico alone bought 100 tons in feb/march. When the ultimate market manipulators are all buying gold you know something is afoot. The gods that lord over the rest of us are losing faith in fiat.

One thing is certain, the Fed is a political animal and the stat politicos fear above all others is employment. Job numbers aren’t meeting expectations which means we’ll see another round of stimulus. The ultimate keynesian stimulus is war but hopefully we don’t go that far. Probably be more of the same, governments throwing money at a problem in the name of job creation, failing miserably and driving up price of commodities even further. In the meantime wallstreet will be there trading behind scenes, racking up another year of obscene gains.

#63 Living In Edmonton on 05.06.11 at 3:34 am

Gosh the Real Estate is slowly but surely turning….
Per square foor prices are back to the 2006 levels now here in Edmonton.

A bigger plunge could be expected late summer or fall for sure. Just the estimated TAX cost for an average house will be at $2599 now for 2011 here in Edmn., like Groceries & Power prices have risen over 100% in Edmonton due to the Conservative Government deregulating everything. Housing prices are up 200% in most areas in the last 10 years too. Yet, income in Edmonton has only gone up about 24%. Scary. We are really in a credit bubble here in edmonton. The average household debt in Edmonton was only about $50,000 it now stands at almost $180,000! No wonder foreclosure & bankruptcies are still increasing here.

#64 Montrealer on 05.06.11 at 3:44 am

@ #22 Bill Grable on 05.05.11 at 10:24 pm
I never carry any cash. For food, we buy only when it’s cheap. I have dozens of less than $2 credit card purchases for groceries.
It allows me to track spending with Quicken, allows me to buy the stuff that’s cheap on my way back from work (I do 2-3 different grocery stores every week depending on deals). This reduces my grocery overall bill by more than 30% compared to people not watching prices/going to one single store.

Now the guy buying $0.64 bananas with the credit card might be smarter than you think, and richer too.
Credit cards do not have fee if you pay on time, there is no downside of using them if you don’t use them as a loan.

#65 Aussie Roy on 05.06.11 at 4:21 am

Aussie Update

Well it goes from, not so good, to, looking a bit soft, to, oh my godness we have a shortage of buyers.

Auction clearance rates across the nation hit the skids.

Ok very few Auctions in Darwin, but after watching these results for more than 10 years, I have never seen ZERO % clearance rate – LOL…

“Properties I’ve had for years that were worth a lot of money all of a sudden were worthless,” he said.

“There’s dozens of developers in Wollongong who are in the same boat. I’m not the only one.

“The shops in the theatre were sold for less than $500,000,” he said. “They cost over a million apiece to build.”

The Reserve Bank has confirmed an interest rate rise is likely at some point, but its economic forecasts amount to a thinly veiled warning that rates will rise faster than expected.

Property prices may drop more than 5% during 2011-12, one property expert has warned, after new figures released by SQM Research show the number of listings added to the market grew by 3.9% during the past month, and by over 68% during the past year.

More than 5% LOL hang on isn’t it different here, we have a shortage and loads of rich asians on our doorstep.

#66 Ky on 05.06.11 at 4:44 am

Good post, but we should point out that Real Estate is technically not a commodity like gold, silver, corn, cyanide, etc…

#67 Enjoy that... on 05.06.11 at 5:02 am

Silver crashes 30% overnight in value. “After reaching $48.35 last week on Friday, by Thursday it had fallen almost 30% to $34.95.” Gold falls on Thursday with oil 9%, rice 5%…

All I can say, is THANK GOD I never got into Gold and Silver. They are just too risky to bet on and those who bought lost 30% last night.

I’m not poking gold and silver bugs, but maybe this is your wakeup call to get out before it goes down another 20% today.

#68 Who's the Greater Fool? on 05.06.11 at 5:16 am

There’s a correction in the PMs market and it supposed to now be a bad investment. Wow! Frankly, I’ve been waiting for the correction and its soon time to buy more.

#69 HappyPlace54 on 05.06.11 at 6:09 am

I would be happy to keep renting if I could find a nice place here in Etobicoke and didn’t have to worry about my landldord listing the condo at some point. Wish I’d bought 5 years ago as I would have made a great profit. Instead prices are higher than last year and with fewer listings they’re still selling with no problem; the downturn has not hit this part of Toronto. On the plus side, I have more cash than most people I know so I guess my impending retirement is safer than most.

#70 maxx on 05.06.11 at 6:09 am

#15 Carp- Well done! We’re hanging back as well. Contacted a realtor re a listing this week. When he quoted the price, I laughed and he immediately said “well, this is what the seller wanted to list at- it’s very negotiable”. We’ve run into this scenario a few times this Spring.
It seems that many sellers realize that the market has turned downward and so they deliberately overprice in order to obtain what they are really willing to accept, with the buyer feeling he/she has gotten a good deal. Wait…. even public servants are on the austerity radar scope. Remember 1995?
The other thing we’ve noticed is that, in some areas, a new listing seems to appear only once another has sold or dropped off the market. It could be coincidence, but it’s happened enough that it’s beginning to look like an emerging pattern. These tactics do not indicate a confident market.
We’ve also realized that a better property ALWAYS comes along. We used to feel that we had lost out when something interesting had sold, but no more!

#71 MaxDeus on 05.06.11 at 6:09 am

In the previous post entitled “First-timers”, Garth states that:

In reality, supply is falling faster than declining demand – about as clear a sign as you can have of a sick market. Potential sellers are unwilling to list since they’re freaked out over finding another house. After all, with prices as they are now – bubblicized by too low rates and too many hormones – most people would never pay for their own house what they think someone else must.

One factor that I can perhaps offer that might help to explain the low supply and reluctance for potential sellers to sell is that – correct me if I am wrong – but I believe that one of the changes Ottawa made in March was the removal of CMHC coverage for HELOCS; so anyone who has a healthy HELOC now is really stuck as if they sell they must repay it on closing, but would have trouble getting another – am I wrong in thinking this?

#72 maxx on 05.06.11 at 6:11 am

#4 Mr Lee- good thinking, batman!!

#73 Gary in Alberta on 05.06.11 at 6:12 am

I have been buying gold and silver consistently since about 2001 and plan to continue to do this till the fundamental reason to own paper dollars or bonds or securities becomes justifiable. (Currently is isn’t by a longshot)

The very fact that the 100 or so retiring (i.e. defeated) MP’s from the May 2nd election alone are entitled to something like 1/2 billion dollars in financial settlements and pensions is way more than enough proof of the insanity that is going on in this country with respect to the destruction of our currency and savings.

That kind of greed and self serving “democracy” too is also i think part of the reason for the bloated and out of control real estate markets.

Play your paper markets and trade your hearts away but this whole system is fundamentally and i am out and staying out period.

I really don’t care what the current price of gold or silver is as and have absolutely no interest in selling or trading what i have accumulated. I simply plan on passing it on to my children either inter vivos or at the end of my trail unless there becomes a fundamental reason to change and i don’t think that will happen till this whole shitbag collapses and government becomes accountable if ever to it’s constituents.

Good luck to all here and perhaps consider reading up on a bit of history for yourselves.

As least try to get the facts straight: The 113 MPs leaving office, if they all live to be 80 and never have a government job again in their lives, will collect severance and lifelong pensions equal to $116 million, not ‘half a billion’. This money, of course, is fully taxable. While in office they were also unable to contribute to RRSPs, since a significant part of their pay was diverted into the pension plan. But if it makes you feel more secure to be a hater, go for it. — Garth

#74 Markey on 05.06.11 at 6:26 am

Interesting article by Joseph Stiglitz in Vanity Fair. I see the same unfortunate trend happening in Canada:

#75 maxx on 05.06.11 at 6:29 am

#29 Shaun- Congratulations! I hope you’ve had a nice bottle of bubbly to celebrate.
Looking at your “statusy” friends from your secure perch makes you realize how much it costs to service an inflated ego… ego is a long-term opportunity cost/risk.

#76 pbrasseur on 05.06.11 at 6:33 am

Sorry Garth, I don’t buy your theory about the real economy being behind this drop in commodity prices.

To me, at least so far, it looks more like a case of bubble popping.

This guy explains it well:

A bubble is the same thing as a disconnect from economic fundamentals. — Garth

#77 David B on 05.06.11 at 6:36 am

Garth – you should market “Garth Saves” t-shirts . . . I’ll buy one.”


YES! and save us from our new King …. as mentioned markets are going south exactly as he with a pocket full of economics said would happen if they Did Not elect him.

#78 C on 05.06.11 at 6:48 am

So Canada created +58,000 plus jobs in the monthly report released this morning, yet the BOC still has rates at all time lows.

Enough already Carney, start raising. This is turning into such a joke. A guy on BNN this morning doesn’t expect Carney to start raising until October? Unless we get a huge collapse, that would be head scratching.

I believe he should have started raising long ago, and he should start raising in July by .25-.50% at each meeting thereafter. We need to be saving more, not spending more.

And you wonder why we have the biggest real estate bubble in the world?? Way to go bubbles Carney.

#79 Daystar on 05.06.11 at 6:49 am

Well… I hate to break it to those who are high on commodities but… they are coming down. The world will sigh relief if oil comes down and it will, but not below $50 before the end of the year. I’m thinking there will be strong resistance at $60 but copper? Try 2 bucks or below by years end. Gold will stay up there. In fact, I’d wager gold will hit $1750 as a peak before the U.S. dollar begins to bottom and finally drift sideways. We will likely see gold hit its peak I’m calling for next year… late next year if I had to call it, but I’m lol, speculating at that point. (which I’m comfortable with, appears with everyone else speculating here, I’m quite at home)

I will say this much about gold. Unless its physical gold one is investing in (not the tungsten variety and the risk to buy physical gold just isn’t worth it, there is still better potential elsewhere for the risk being taken, especially if copper drops below 2 bucks) or one invests in gold stocks that actually generate good profits, gold carries a major risk in a selloff market. The pressure of a major market correction on gold stocks that don’t churn earnings will be enormous regardless of what the price of gold is at. Think 08′.

Speaking of points, some of us are missing the point majorly with commodities. Japan has just gone through a serious disruption and the rumbles and waves aren’t over. Readers, c’mon. Japan is the second largest economy in the world! Does anyone seriously think the second quarter of the Japanese economy won’t lay a mother of an egg? Or their 3rd, 4th and next years 1st? They will be swimming in negative GDP putting a magnifying glass on their debt like never before! Some blog dogs are thinking perhaps Ventures/TSX is a typical hiccup correction, that Japan’s woe and high valuations are being priced in as we speak and the markets will rebound. But wait. There’s more!

People can talk U.S. QE2 all they want and how the U.S. dollar will continue to fall (at a glacial melting snails pace) boosting commodities but… that won’t last forever. Japan is a mess and it will disrupt the world economy signifigantly. It has the ability to pop the U.S. dollar all on its own. Couple it with high oil prices, runaway inflation in Chindia, European economic chronic recession, pricey oil for Italy, revolutionary arabs, climbing Unemployment in the U.S., hey, things don’t look good. Its a falling market, the smart money got out back in April and in case people haven’t quite figured it out yet, its not a great time to be “all in” equities.

This DIY investor is sitting on the sidelines til’ the fall, minimum pretty much “all out” and if I happen to miss the “buy now or be priced out for ever” offer, oh, well… wouldn’t be the first time. Somehow, I think I’ll manage. (and sleep :) )

#80 Rob now in Nova Scotia on 05.06.11 at 7:10 am

Great post. I’ve always been amazed at gullible home owners who bought at $300,000, sold at $450,000 and brag how they made $150,000. At least Andy has the brains to calculate his actual monthly payments to the landlord (his bank), deduct the taxes paid, upgrades, maintenance, realtor fees, then take his sale price and then calculate his real profit (in this case, a small loss).

Garth, I disagree that silver is in a bubble. A bubble is always characterized by oversupply and usually everyone is getting on board. Silver is not in over supply and in fact is getting harder to get and there is no way that the general public is starry eyed over silver. So, no bubble. The mania comes later. Silver has always been very volatile but its price follows gold, which is real money. I personally believe that silver was taken down but that it will quickly bounce back to $45 and keep going higher. The Comex is getting close to declaring force majeure but I’m a silver bug so I just keep buying whereas everyone else I know spends an equal monthly amount on a mortgage.

False logic. Gold’s last massive bubble (and collapse) had nothing to do with widespread public ownership. Another piece of groundless mythology from metal-pumping sites. — Garth

#81 maxx on 05.06.11 at 7:13 am

#62 Cato- and every additional round of QE only serves to make the problem worse. Central banks will never finesse their way out of this one. And they know it. They are pinning their hopes on a job recovery which penny-pinching, software-rich industry will never produce.

#82 SMOKING MAN on 05.06.11 at 7:13 am

#46 Dark Sad Monster Bunny on 05.06.11 at 12:10 am

Nice link but that’s not how I raised them, I brought them up with zero discipline, wanted to get the most creativity out of them, essential element for entrepreneurs.
As far a school goes I never pushed them as I realized when I was growing up that school is mostly a behavior shaping exercise with an emphasis on obedience training so when done they suck up to the man no questions asked.

Now this worked well on the youngest. Once called to the office I was lectured by a gamblaholic principle who came out of retirement cause he blew his wad at the casino. Told me son # 3 would be un employable, I just laughed and told him I was raising him to be a employer.

But he is like me, fearless free and has the Can do anything attitude. The other too are not like me, hence should have raised them different. When looking back at videos of when they were small, their behavior is the same they are just a lot bigger now. Moral of the story not a lot a parent can do in shaping there kids, we teach them to mask their natural behavior traits, so they can be what we envision but the real them always comes back to the surface.

#83 Kevin on 05.06.11 at 7:21 am

Andy says he lost money on his condo (principal, interest, strata fees, realtor fees, etc.), but is he remembering to factor in what he would have paid in rent on a comparable property over those same 5 years when calculating whether or not he came out ahead? It doesn’t seem so, but without raw numbers to go with his story, it’s hard to tell.

He did. That was his point. — Garth

#84 John on 05.06.11 at 7:22 am

Whatup with all the italics today? No relief at the pump yet in NS despite the oil drop :(

#85 MikeT on 05.06.11 at 7:34 am

It’s “principal”, Andy, PRIN-CI-PAL.
Principles are the things few people have these days.

#86 Oh! Canada on 05.06.11 at 7:38 am

Good thing homes are not made of silver. Analogy is not analysis.

Speculation is speculation. — Garth

#87 S.B. on 05.06.11 at 7:40 am

Silver down almost 4% today, currently. Store of money or gambling den? It’s you vs. Goldman and the likes. The house always wins.

#88 MikeT on 05.06.11 at 8:07 am

@ #22 Bill Grable:
I get 3% cash back on my grocery shopping from the cc company. No fees, no hidden charges, no interest paid ’cause I pay it off every month, no need to carry cash with me, especially heavy loonies and toonies.
Nothing wrong with 64 cents on cc from my point of view. And btw, I got 500$ cash back in 2010 and paid zero interest. Sweeeet!

#89 Love this Blog on 05.06.11 at 8:37 am

You said : Renting = Family Shame and Disgrace

How about losing your house and cars to the bank? Divorces skyrocket and addictions follow behind, all due to financial and debt problems. Does that bring any famliy shame?? ‘Cause we are going to see ALOT of that in the next year.

“Folks, Folks, that’s all Folks.”

#90 Another Albertan on 05.06.11 at 8:37 am
#91 Live Under Your Means on 05.06.11 at 8:39 am

#83 John on 05.06.11 at 7:22 am
Whatup with all the italics today? No relief at the pump yet in NS despite the oil drop.

Wondered the same John re italics. Re relief at the pumps, we find that when the price drops just before Friday it takes a week to see relief. However, the opposite is true when it drops – thanks to gas regulation. :-)


Did you recently read a reader’s comment in the Chronicle Herald re the increase in water rates. Chap reduced his water consumption by 50% over last 12 mos. yet his bill is the same or higher as they increased the basic water charge. We have noticed similar results. Would provide a link, but the CH has the worst search engine of any online paper that I read.

Our property assessment has doubled in the last 10 yrs too. IIRC, we pay the 2nd highest overall taxes in the country.

#92 Live Under Your Means on 05.06.11 at 8:42 am

However, the opposite is true when it drops – thanks to gas regulation.


Oops – should be when it rises instead of drops.

#93 bigrider on 05.06.11 at 8:44 am

Garth’s response yesterday to me about buying silver-“Gamble, Gamble Gamble”

Here are two really dumg guys, John Embry and Erci Sprott who disagree with


Look a 10 to 20% allocation to silver and gold cannot possibly be a stupid move given macro backdrop

#94 bystander on 05.06.11 at 8:45 am

#17 ‘e’ wrote:

silver to gold ratio is 1:16, we’ve got a long way…”

I stopped reading right there…

Shit to Potash ratio is low. Shit has the most potential to appreciate. It makes a great fertilizer. Food prices are going to the moon because there is not enough for everybody. BUY shit. It’s going to become the new gold. After all, shit to potatoes ratio is low. We have a long way to go.


#95 Shoggy on 05.06.11 at 8:46 am

Hey Garth,
I see you neglected to mention that Canadian housing starts were up 17%. Funny how you dump on the market when all that is going on is a normal correction. The markets have been going up since basically August of last year and were due for a correction. This is not to say that real estate won’t correct, but for those who have been out of the market since the crash of 2008, they have lost the opportunity to make some fast money on housing.
You loose a lot of credibility when you cherry pick the stats that you are willing to use to make your points but neglect those that contradict your stance.
Still waiting on the often promised, yet to be delivered information on bond buying for the retail investor. I will be interested in seeing what the market is going to do to the bonds you bought (in real dollar terms) once the interest rates start going up.

Starts are not closely correlated to resales, where 90% of real estate activity transpires. As for bond prices, they react more strongly to demand than rates. I thought you’d have noticed that. — Garth

#96 realpaul on 05.06.11 at 9:03 am

Temporary tempest in a teapot due to margin requirements hiked without warning. Is someone trying to ‘scare off’ metals investors? Hmmmmmm.

Exerpt from George:

“Silver’s Decline – New Scams

Several readers have asked me for some sage advice on what to do about silver while others are asking “Why’s it going down?” The answer to the second is obvious as pie-in-your-face: More sellers than buyers (Doh!).

But what made them sell? THAT is simple: I’d have to check with JB over at but as I seem to recall, a week ago it took about $12,000 to hold a silver contract on margin. The increase in margin means that the new margin requirement is $24,000.

That served to stampede enough of the “weak hands” out to bring the price down a bit more than $10-bucks. But whether that’s a long term dip is anyone’s guess. Except, I haven’t sold my lone gold coin, yet. ;-)

You can read up on the back-story over here: About how the margin scam turns weak hand and how rumors about the legendary Big Fish (Soros) can be ‘played’ but the real story is on how some of the metals dealers are starting to actively hedge with physical in a most interesting way.”

Boys and girls….the fundamentals haven’t changed…..stop up your ears with batting and focus on the big picture. Every year our government prints out 15% more paper than in current circulation….thats the actual definition of inflation…..M3…..currency.

If you were an Arab would you take a monetized dollar for your barrel of oil? No…you’d want a $1.15. This is exactly why gold and all other commodities have been ‘increasing in value’…which of course they have not. It takes more units of currency to buy the same commodity……the ‘increased price’ is just smoke and mirrors. Seeing a plate of french fries doubling in ‘price’ over five years is not ‘gouging’ it is monetization.

Its exactly the same with real estate…’re house has doubled in price over the past five years …right? But so has milk, eggs, meat, bread, gas, taxes etc etc etc. You’re not making any real money……the government has just figured out a way to print money and not pay for it. Keynesians …… go figure……

#97 Oh! Canada on 05.06.11 at 9:13 am

“Speculation is speculation.” — Garth

I would tend to agree, except that the current real estate market is not a highly speculative one.

Show me any neighbourhood that drops 25% in value in one week, and I will change my tune.

Illiquid investments do not change valuations as quickly as those with an instant market. You have nothing to add here. — Garth

#98 45north on 05.06.11 at 9:13 am

Mister Obvious: since you posted everything is in italics nothing against italics, my brother-in-law is italic

Desperate Wife: I have run out of arguments. help! play defense and not offense! You have an amount you have saved, Garth is saying that ordinary (not brillant) investment will get you 8%.

Make it crystal clear that you think buying in Vancouver is a dumb idea and that you personnally are willing to suffer the loss and the constraints that choice entails. You will try to raise your children as well as you can despite their fathers foolish investment decisions.

and give the choice back to him

#99 Utopia on 05.06.11 at 9:16 am

So how much more pain is coming for metals bulls? Good question. I can see that today will be another down day for PM’s and oil already. The dollar may be inching up as we speak and bonds rebounding. I sincerely hope so.

Yesterdays oil and silver sell-off had the whiff of panic about it too and so there is even a stronger likelihood that a downward trend in PM’s will continue today. The crowd that lives for metal is now in disbelief though.

This cannot be happening to us! The dollar is supposed to crash. The experts all agree on it too. Everyone knows the dollar will crash and then us Gold-bugs will be rich, Rich, RICH!!! Hooray for gold! God bless Silver too!

How ridiculous. I have news for some fools. The dollar will not crash to zero anytime soon and the reserve currency status of the US dollar will remain intact as long as the US is one of the worlds biggest economies.

Is that not plainly obvious?

It has been a long wait for a solid correction and this one is well overdue in my opinion. It is just a cycle. I am sorry for those who just lost 25% on Silver but they should not be surprised despite all the rationalizations in the world that their metal of choice was going to see a hundred bucks within a months time. So the rules changed. Thank God.

Some of the negative inflationary aspects of stimulus and QE2 will now be vanishing along with excessive commodities valuations. Really, we should be very grateful and welcoming this correction as the market had run far ahead of itself and any sane person could see a blow-off was about to occur.

I am amazed that so many seem surprised by the recent and sudden moves too. The market, as we know, has been fully pumped with dollars, care of liquidity measures that were badly misdirected on an acquisition spree around the globe. Everything physical rose in price as the antidote to a fractional frenzy gone wild. That trend is now ending for the time being.

Silver was stellar. Oil over the moon. A bit too much though.

But now change is again at hand and there is a correction taking place in advance of the conclusion of QE2 (and in the absence of any announcements of QE3).

There is no doubt that measures introduced by the Fed have exported inflation all around the world and led to some of the political upheaval we are currently witnessing across the globe. It is also clear too that those same measures were leading to many other negative conclusion for all of us. We are all in this together, remember? The First world and the Third world have both suffered.

My central theme has been that the medicine of Easing was also capable of killing the patient. Quantitative measures taken too far could only lead to extreme pricing and speculation in the broad commodities sector, in energy, and specifically oil. The outcome has been very detrimental to broad, consistent economic growth. The positive effects and the desired outcomes of Keynsianism have proven that they can self-extinguish if not controlled.

The result of this is that the medicine being applied to generate global growth was in fact creating the risk of sending us straight back into recession. The process was defeating itself. The medicine was killing the patient.

This has now been widely recognized and there are dissenting voices at the Fed who see that what is being unleashed is beginning to turn negative to their own interests.

QE3 cannot be justified as long as QE2 is seen to be a failure. There must be other ways to stimulate the global economy without bringing on the dislocations we have recently witnessed or the distortions in the balance sheets of our major trade partners.

For the moment, lets be grateful that the price of oil has fallen and taken some of the sting out of the financial squeeze so many are experiencing or about to experience. Fuel prices will gradually fall back and the process can be reviewed again from another perspective.

For the metals bulls…..I suggest you take a breather for the summer. The world will not end. Your worst nightmare that the dollar would actually rise and cut short the spectacular gains you have already made is now imminent from my perspective.

It is welcomed too for if the dollar were in fact to plummet as many of you swore was inevitable then the unimaginable would then be upon us.

Who really wants that? Who wants extreme financial instability? Only the gold bugs I imagine. Those who cannot see far enough past their own selfish personal investment decisions to understand that a return to a gold standard would actually devastate the economy right now.

Are you people anarchists, or what? A small handful of very vocal people are now openly rooting for the dollars collapse. They see it is their own salvation, proof of their own superior investing prowess and they justify a return to gold as an act of responsibility on the part of governments to bring sanity back to the financial system.

I don’t entirely disagree that responsibility is lacking where the accumulation of debt has become overwhelming and destructive. I do not agree though that a dollar collapse is in anybodies interests. This perhaps is why I have such revulsion to the hyperinflation camp as it is populated by an extreme vision of financial accountability and punishment for sins of the past.

That camp is dog-eat-dog. Every man for himself and by virtue of that sentiment, to hell with society and the greater good of the nation. That camp, numbering only in the small single digits of real popularity (1% buy precious metals) seems to have taken over the media with their thrilling ideals of ending the financial system as we now know it and taking the world back into the stone age where credit might become extinct.

Good grief. Have they even thought the idea through to its conclusion?

There is only hope for gold-bugs in that small world and it seems they will only be satisfied when the entire system has been upset and turned over, when they are the last ones standing, ready to barter and trade bullion for food and supplies. Rarely have I heard anything so idiotic in the past. It amounts to extremism, nothing more, for it surely is not rational.

What a grand new world that will be for the other 99% of the population though. It is at times like these when precious metals have gone from being a mere investment class to being a black religion that I actually begin to favor the idea of confiscation. If only to resist the hazards of selfish self-preservation ahead of the common good.

Anarchy is never a good substitute for the excess of government and high levels of personal indebtedness.

There must be better solutions.

#100 Silver on 05.06.11 at 9:17 am

I don’t get all the snickering about silver prices falling? The metal is still up 211% since August. Where do you think PM’s will go after Bernanke floods the markets again with another $600 billion. In case you didn’t get the memo Washington for what it is worth is demanding China increase the value of the Yuan. PM’s are a hedge against a falling greenback, simple as that.

Silver is a 100% pure, speculative, casino investment. Anyone with a portfolio weighting of more than a few points should be prepared for intense volatility with as much potential for tears as gains. — Garth

#101 Another Albertan on 05.06.11 at 9:29 am

I’ll bet there is a missing tag to close off the italics on one of Garth’s italicized “replies” on a comment above. That’s what I tried to say before I clicked on “Submit”, but obviously I failed. Friday feels like a Monday. :-|

Everyone else’s mileage may vary.

Fixed. — Garth

#102 Who's the Greater Fool? on 05.06.11 at 9:34 am

At 10:15 this morning silver is up 3.46% and gold 1.16%. No 20% down yet, though I’m looking forward to it so I can stock up on more.

Up 3% from being down 24%? And you’re excited? — Garth

#103 Utopia on 05.06.11 at 9:34 am


“They say you should never short, all the investment guru’s are on the same page……When you short and you are on the right side of the trade, you make it fast as falling prices move faster.. I have made way more money shorting….

Now if I could only figure out parenting, GOD I SUCK AT THAT”.

I don’t have kids Smoking Man but I feel for you buddy and can understand the stress of parenting. I smoke too by the way. WAY TOO DAMN MUCH. Gotta quit one of these days. I am also a little dyslexic. I have a spell checker to help me out though and it is fantastic. Are computers not great for people like us? You would not understand anything I wrote without it to be honest.

Hang in there man. Teach your children well (and all that jazz……CSN&Y… know the album well I bet).

Oh, almost forgot. Shorting is great if you get it right. The money is many times better, much faster and it is way more risky. But I agree, shorting is the name of the game right now and some of the hits have been stellar.

Doncha just love the Gold/Silver Bulls and all the errors of their ways right about now. Gimme the money baby!!!!!

#104 hoe H on 05.06.11 at 9:39 am

Food prices have not gone up. Most of you have no understanding how food prices work. Its easy as 123.
OIL is the barometer of this planet. It goes up then everything goes up. And its not the Arabs or oil companies. Oil is set my IMF and the World Bank.
They run the world as this is the New World order George Busch SENIOR talked about.

#105 borrowedcarbon on 05.06.11 at 9:40 am

I keep reading this here. Using a credit card for small purchases doesn’t mean you have no cash. I do it all the time for the airmiles and convenience.

#106 Simon on 05.06.11 at 9:55 am

Precious metals are a very liquid investment, yes they may fluctuate in price and sometimes quite dramatically, ingots or coins are easy to convert to paper money in small or large increments.

#107 45north on 05.06.11 at 10:08 am

Utopia: There is no doubt that measures introduced by the Fed have exported inflation all around the world and led to some of the political upheaval we are currently witnessing across the globe.


I smoke too by the way. WAY TOO DAMN MUCH. Gotta quit one of these days.

get a patch, do what ever you have to

#108 Basil Fawlty on 05.06.11 at 10:21 am

Wow, gold and silver correct in an ongoing bull market and I am supposed to worry.
Precious metals investment in this economic climate of monetary mismanagement is very prudent. Why else would the Chinese and other cental banks be increasing their holdings? Nothing has changed, the US has no choice, it’s inflate or die.
Speculation my arse, protect thy self, or at least your purchasing power!

#109 Andrey on 05.06.11 at 10:24 am

Smart speculators were taking profits before the dip

#110 TheBigLebowski on 05.06.11 at 10:28 am

Up 3% from being down 24%? And you’re excited? — Garth

You’ve heard of long term investing before right? Or are you a house and stock flipper for a short term profit. Has the U.S overnight paid down its debt ? Has the supply of gold/silver risen by 50% this week? Are central banks selling now instead of buying gold ? Has the interest rates around the world risen higher than inflation while i wasn’t looking ? The answer to all of these is no. So the secular bull market that is in the 11th year is still in tact. In other words in a bull market the dips ARE bought.

#111 BPOE evil twin on 05.06.11 at 10:29 am

#52 Pat on 05.06.11 at 12:49 am

#225 The Original Dave wrote:
“A lot of times people come here and question Garth Turner’s motives.”

Really, people are that dumb?


It’s obvious isn’t it.
He’s gonna Thumb wrestle for the bloc Quebecois laedership

#112 Abitibidoug on 05.06.11 at 10:34 am

After the stock markets taking a good dive on Thursday, they are up again as of 11AM Friday. Damn, I was hoping a good correction would continue so there would be some good buying opportunities! Let’s hope this rally is a short term trend, and the overall trend is down for the next month or so.

#113 Dontcallmeshirley on 05.06.11 at 10:35 am

Garth, say it ain’t so.

Your silence, when Flaherty criticized Layton for musing he might influence the Bank of Canada governor, was deafening.

Flaherty implied the government and BofC are wholly independent. Come on, speak up!

#114 Utopia on 05.06.11 at 10:42 am

Silver is a 100% pure, speculative, casino investment. Anyone with a portfolio weighting of more than a few points should be prepared for intense volatility with as much potential for tears as gains. — Garth

Wish I had been able to say the same in such a few short words. Perfection. There are tremendous gains possible but history tells us most end up losing. The downside is all negative for most. Metals are a real crap-shoot at times. It does not help that the establishment is stacked against your wins all the way up and all the way down too. The education can be severe for everyone struggling to fight the system.

#115 Evangeline on 05.06.11 at 10:47 am

((If you were an Arab would you take a monetized dollar for your barrel of oil? No…you’d want a $1.15. This is exactly why gold and all other commodities have been ‘increasing in value’…which of course they have not.))

If you were an Arab and Muslim, I think you’d want gold. If you ever register at the Dow Jones site, you will be offered many free newsletters, several of which focus on Sharia finance. There are also YouTube’s about Sharia finance, and the way the clerics see it and teach it is that finance should be based on a gold standard. IMO that world view is affecting the value of gold in the world market.

#116 Robert Dudek on 05.06.11 at 10:48 am

Silver up over 4% and gold up about 1.5% over New York’s close yesterday.

#117 TheBigLebowski on 05.06.11 at 10:51 am

JP Morgan had no losing trading days in first qtr

If you still think the markets aren’t rigged. This is once again another quarter where they had no losing trades/

#118 Robert Dudek on 05.06.11 at 10:52 am

Silver up about 19% year-to-date. How are your investments doing?

#119 SMOKING MAM on 05.06.11 at 11:01 am

UTOPIA. Dyslexia is a gift. Who cares if spelling sucks just like little kids in bruce wills moves see dead people. We see pics. Look at any 5 year google carrt. Look what happens to the markets when you see batman ears

#120 arctodus on 05.06.11 at 11:09 am

Oil IS the barometer of the modern economic system. The bedrock issue (That Garth and 99% of pundits out there simply cannot seem to comprehend) is that globally we have hit the physical limit of extraction..period.

The entire economic edifice of the globe is in hard contraction because of it. Even the very few economists (like Jeff Rubin for example) that recognize this FACT cannot seem to factor in the realistic socio economic result of this “it really is different this time” scenario.

When I hear statements that disparage PM investments as “speculation” I just smile. Of course it is speculation…..all human monkey games that involve financial transaction are speculation. The idea that there exists a broad based “safe” methodology to “preserve wealth” for an investor long term in this reality is delusional.

The realistic outcome of todays situation (socioeconomically speaking) is very, very dire. Anyone who thinks otherwise is either selling something….or is psychologically incapable of looking at the world without rose tinted glasses.

We ARE seeing the rise of tyranny in North America…as should be expected in a world where energy resources are crashing…just as Chimpanzees in a drought environment play life or death gamemanship, so to do human apes…..

We are entering a very dark time in humanities history and you can all forget about niceties such as “democracy” and “rule of law” and easily obtainable fresh food in the winter…and ….you know the rest

58 percent of Americans now believe that the USA is in a depression despite what the happy heads on CNN might say…they are correct…..and Canada is entering the American reality now

Try and think for yourselves people…human chimps are the most dangerous creatures on the planet and now that our feed trough (cheap oil) is running dry we are about to become much, much worse.

Please no responses to the effect that I am fear mongering or wanting to live in a cave…such knee jerk responses merely serve to reinforce for me the conviction that I am right in my analysis and that a lot of folks are piss in their pants afraid these days and wanting to shoot the messenger.

#121 Mr. Reality on 05.06.11 at 11:19 am


I agree fully. Shorting done at market tops can yield huge results if you stay the course and keep the emotions in check. Keep itchy fingers from pulling the trading trigger too early and ride the short all the way to the bottom.

Mr. R.

#122 jess on 05.06.11 at 11:23 am

“It all boils down to the(economists who are PAID to be wrong) fundamentals of economics.”

#123 not 1st on 05.06.11 at 11:25 am

Utopia, too bad you couldn’t share your koolaid.

Look, the U.S. is insolvent. Thats what 100 trillion debt looks like on the worlds largest economy as you put it. They will never ever pay it off and the U.S. economy will never ever be as strong as it once was. Hence the dollar will continue to weaken. I am not a PM bug because if a currency collapses, who is going to be able to trade with you when only a fraction of the world has gold or silver.

The U.S. will lose its reserve status eventually. Might take 20 years to happen, but its already baked in the cards.

#124 Gord In Vancouver on 05.06.11 at 11:26 am

#78 C

So Canada created +58,000 plus jobs in the monthly report released this morning, yet the BOC still has rates at all time lows.

Enough already Carney, start raising…….

My sentiments exactly.

Earlier today, Carney blamed Japan and the strong loonie for potential future economic weakness – you knew the spin would commence immediately.

Be positive – Carney’s stubbornness increases the likelihood of a 50 basis point hike later this year or early 2012.

#125 Young Old Fart on 05.06.11 at 11:28 am

#24 e on 05.05.11 at 10:33 pm

I was only giving facts and my opinion- the possibility of 6000/troy ounce….

How much you want to bet silver goes through the roof by Christmas? I’ll bet you an ounce… of gold I mean…


The roof being….what…400 bucks an ounce for silver?

LOL…I’ll take that bet…..

#126 Tom Thunb on 05.06.11 at 11:49 am


I dunno…I just wanted to see what the thrill is for the dumb asses that keep screaming “First”.

To be candid, it wasn’t very exciting.

Then again, unlike them, I actually have a life.

#127 me and my big mouse on 05.06.11 at 11:51 am

#104 borrowedcarbon wrote: “I keep reading this here. Using a credit card for small purchases doesn’t mean you have no cash. I do it all the time for the airmiles and convenience.”

Some may even pay you back. On the other hand, it’s easy to counterfeit.
Is cash dirty as toilets? Have anybody examined?

#128 JB on 05.06.11 at 11:58 am

Hey Garth,

How do you feel about the leveraged ETF’s out there like HDX? I always felt that the double up or double down’s were just too unstable for me but I was curious as to how you felt about them?

#129 Why are prices so high in Canada? on 05.06.11 at 12:02 pm

Bought Sandisk SDHC 30 MB/s 16Gb cards (class 10) for $48 US from an online retailer (memoryten). Here in Canada these same cards are $169 plus HST from the electronic big box retailers and $139 from camera stores. Is it any wonder housing is out of control in this country? I refuse to shop in Canada any more than I have to. Twice a year I buy all my clothes at outlets in the USA and the savings pay for the holiday.

#130 Sitting on the Sidelines on 05.06.11 at 12:09 pm

re credit cards – using a credit card for small purchases doesn’t necessarily mean you can’t afford it but often it does. My daughter worked at a Starbucks on the west-side of Vancouver for three months last year and she mentioned that every day several customers would have a credit card declined for a purchase of under $4.00. I personally have witnessed customers at the Bay going through three or four cards to pay for something in a vain attempt to find a card where the limit hadn’t been reached.

#131 edmonton mortgage broker on 05.06.11 at 12:11 pm

convenience store owners who incur substantial transaction fees may consider you a prick for using your credit card to pay for that chocolate bar, but that’s about all you can extrapolate from such a transaction. i never pay cash no matter how small the purchase because i never carry change.

#132 Ms. Informed on 05.06.11 at 12:20 pm

#93 Bystander

Funniest comment ever. You made by day!
I was in line at a Vancouver Supermarket and a young hipster with expensive blackberry gadget was in front of me. Tried to pay for his $150 bill unsuccessfully with 3 different cards. He was still on the phone trying to get his groceries paid when I left the store.

#133 Credit Cards on 05.06.11 at 12:21 pm

My family income is around 200K and my wife and I both use a Scotia Momentum visa card. My wife always used cash and hated credit cards. I talked her in to using the card last year. It paid us in November last year about $950 is cash back rewards. We used this money to by a deluxe Toro snow blower. However I stopped using the card this year because I know I can save far more money by using cash and not charging everything. If the money is not in my pocket I don’t spend, therefore if I am shopping less and saving more money. Even though I paid the card off 365 days per year it was still a pain as merchants wouldn’t post for a number of days or weeks. Every time I thought the card was paid off a latent charge would pop up. With interac things are posted immediately to your balance. Also I reasoned that if you play with snakes you will eventually get bit. In the past two years Scotia Momentum cancelled my card claiming it was compromised by a merchant. More likely story they thought my dividend was too high. Anyone’s I told them to piss off as I was tired of contacting my utilities with a new card number.

Final note, no one buys a house or became a millionaire by collecting points. Save money, stop charging and maybe someday you can afford a house.

#134 Fort McMurray nouveau riche' on 05.06.11 at 12:23 pm

I work in Fort McMurray;
I clean and polish lug nuts for local Ferrrari Dealership
I Make $ 175,000 after taxes

My spouse makes bootleg McDonald’s food in barn.
Yes we know what goes in that food…mostly tar sands waste products. She pulls in about $35,000 week

We don’t trust banks, so keep our money under the mattress, but somehow it is producing more yield than ever.

Very strange

PS We love Beverly Hillbillies re-runs

#135 Alex on 05.06.11 at 12:39 pm

In a remarkably under-reported story, the University of Texas’ endowment fund – the second largest in the country, after Harvard’s – added about half of a billion dollars worth of gold to its portfolio just this month, on top of the half-billion it purchased several months prior.

The university’s endowment now owns a staggering 6,643 bars of bullion (664,300 ounces), which have already appreciated by over $40 million since mid-April when the bars were delivered to a dedicated HSBC-owned vault in New York City. Not a bad start.

Kyle Bass, the well-known Hayman Capital hedge fund manager and UT endowment board member, advised the university on the purchase. He stated his reasoning plainly: “Central banks are printing more money than they ever have, so what’s the value of money in terms of purchases of goods and services? I look at gold as just another currency that they can’t print any more of.”

Apparently, the university agrees that sitting on a pile of fiat paper is an act of faith not befitting a prudent and enlightened institution.

Perhaps the most interesting part of UT’s billion-dollar repudiation of Fed Chairman Bernanke and his printing press, however, is that the fund demanded physical delivery of the bullion. While more commonplace in Europe, this is truly unprecedented for a stateside institution.

The delivery of physical bullion has at least two important implications. The first is that UT perceives gold to be a long-term strategy for wealth preservation, as opposed to a short-term speculation. The second is that UT must be somewhat concerned about the stability of financial markets in general, so it wants to own physical gold safely stored in a vault, as opposed to owning paper claims, shares of gold funds, or other instruments with counterparty risk.

#136 Hoof - Hearted on 05.06.11 at 12:39 pm

Did ya read that story about Tungsten salted gold bars

Roughly 15 years ago – during the Clinton Administration (think Robert Rubin, Sir Alan Greenspan and Lawrence Summers) – between 1.3 and 1.5 million 400 oz tungsten blanks were allegedly manufactured by a very high-end, sophisticated refiner in the USA (more than 16 Thousand metric tonnes). Subsequently, 640,000 of these tungsten blanks received their gold plating and WERE shipped to Ft. Knox and remain there to this day. I know folks who have copies of the original shipping docs with dates and exact weights of “tungsten” bars shipped to Ft. Knox.

The balance of this 1.3 million – 1.5 million 400 oz tungsten cache was also plated and then allegedly “sold” into the international market.

#137 robert james on 05.06.11 at 12:42 pm It would be nice to get some perspective on this disaster from Devil`s Advocate… He has been rather quiet lately..

#138 Credit Cards (rev) on 05.06.11 at 12:43 pm

To add to the story, Scotia Bank canceled my credit card not once but 3 times in two years.

#139 45north on 05.06.11 at 12:50 pm

Arctodus: The giant short-faced bear became extinct about 12,000 ago

on the other hand rabbits have done quite well

#140 TheBigLebowski on 05.06.11 at 1:09 pm

113 Utopia
do you know how to decipher an 11 year chart ? I think its the cash you hold in your hand that has been a downside crapshoot for the past decade and counting.

#141 BPOE on 05.06.11 at 1:15 pm

Folks, gold almost hit 1500 today and a bounce. Guess what, gold will go down somedays and up the others. This is what The American and other doom and gloomers don’t understand. Nothing goes straight up. When you buy gold or Vancouver real estate you are looking at a long term investment. You see folks if prices in Vancouver dip a few percentage points Shiller aka The American is jumping up and down saying “See I’m an American know it all, in your face Canada”. But when you show him a graph of Vancouver Real Estate over the past 5, 10, 15 ,20 etc years he suddenly starts getting hysterical claiming “At least 40% reduction in prices”. Folks, what is the truth? Have gold and Vancouver real estate been going up over the years? Or is dazed and confused Shiller correct? I challenge anyone on this blog including Garth to provide a list of stories where renters have outperformed owners the past few decades. I can assure you they are few and far between as renters generally don’t have the discipline nor ability to invest long term. Bring out the great renter stories. Yup that’s what I thought only the sounds of crickets.

#142 BPOE on 05.06.11 at 1:20 pm

Silver is known as the poor man’s gold perfect for Seattlites.
Gold represents the essence of Vancouver, a true Storehouse of Wealth.
This analogy rings true for Real Estate. Look at the prices of Real Estate of Seattle vs Vancouver. Continue following this trend over the next few decades. Like Gold Vancouver will be worth much much more than Seattle

#143 Cato on 05.06.11 at 1:23 pm

#80 maxx – Thats right, name the game is extend and pretend at least for one more term. I have a feeling companies would be hiring if not for the political interference in the markets that is dictating winners and losers. Its not a free market, we’ve moved to a centrally planned economy and companies who would ordinarily be hiring simply sit on cash.

To everyone who believes we will see the end to QE and a massive correction in markets/commodities I’ll make this point. 330 Billion – thats the amount of new US debt the world can absorb. The US is running 1.4-1.6T in deficit this year and intends to run trillions in deficit over next several years. The US simply can’t sell this level of new debt in the treasury markets. In order to fund the shortfall between what the US needs to borrow and what rest of world is able to lend the US simply prints and buys its own debt (debt monetization). This monetization is the true cause of inflation we see today. Its a political failure of the highest order. Everyone wants to see the deficit cut but no-one wants to see cuts in their favourite pet spending program. So the insanity of debt monetization continues – next time around it won’t be called QE but end result will be the same. More dollar weakness, more commodities strength.

To fellow metalheads – Silver and Platinum aren’t monetary metals, at this point in history they are industrial metals. Silver is a trading opportunity only, we might see silver drop to low 20’s and bounce to high 70’s – or maybe just trade in low 30’s for next several years. I personally suspect someone will attempt to corner the physical market and then blow up the larger paper market but its a speculative bet that carries same risk as a hand of blackjack.

The only metal to hold long term is Gold. Unless the US dramatically alters course and gets off its path of destruction we are going to see a currency crisis in the USD. If USD reserves become a liability for foreign central banks then world trade grinds to a halt and we’ll see hyper-inflation. That won’t be allowed to happen, which is why central banks around the globe are accumulating gold. Gold will form the temporary backstop against currency collapse, and buys the world time to continue to trade while world sits down and creates a new global reserve currency to replace the USD. The US will of course be a big player in this new currency but days of US being soley in control of the world’s reserve currency are over. You and I and the rest of the lilliputians won’t be invited to the table with the banking elites, holding 20% of assets in physical gold is the insurance policy to protect wealth. Don’t hold paper gold, the gold held in many ETFs are an illusion and any physical supply held by these funds will probably end up being seized and sold at “fair market value” to the central banks.

This economic transformation we are undergoing isn’t a single event, its a process with many phases that started in 2007 and its still underway. We’ll probably be in this process for rest of our lives as China takes its proper place on the world stage. Next phase will probably begin in 2013, when the US starts entering period of prolonged currency crisis.

#144 Sail1 on 05.06.11 at 1:29 pm

Employers added more than 200,000 jobs in April for the third straight month, the biggest hiring spree in five years.–u-s-economy-has-the-biggest-hiring-spree-in-five-years

US unemployment rate went up. — Garth

#145 Another Opinion on 05.06.11 at 1:34 pm

OK…you said this crap with Gold too and it charged to a new high. Put your money where your mouth is.
Would you like to bet 1 silver ounce that silver makes a new high before the year is out? I’m betting yes. You?

Are you twelve? You sound like it. — Garth

#146 TS on 05.06.11 at 1:35 pm

Some facts on that big 50,000 job growth number is shown below. Read it carefully. Does not give me a lot of confidence.

Fact one
Employment in part time increased by 41,000 in April, and it edged up in full time. Over the past 12 months, full-time employment grew by 1.9% compared with 0.8% in part time.

Fact two
The largest employment gains in April were in the service sector, led by finance, insurance, real estate and leasing (+19,000) and business, building and other support services (+17,000).

BOC must be careful.

#147 betamax on 05.06.11 at 1:36 pm

The gold/silver bugs use the same fallacious reasoning as RE pumpers: something has made huge gains for years, ergo it will continue to do so indefinitely and cannot crash back down.

Every bubble in history was fueled by the same shallow analysis. The participants are fooled by randomness. The fact that some bubbles continue for several years merely masks the randomness, giving it the illusion of permanency.

Eventually there’s a crash, and after the wailing and gnashing of teeth, people look back and the bubble becomes obvious in retrospect — even to the very people who couldn’t see it before.

It’s not different this time.

#148 TheBigLebowski on 05.06.11 at 1:54 pm

146 betamax
75% of the population in the west are homeowners. The pool of potential buyers is slim. Less than 1% of the same people own any pm related investments. The average over the past 100 years is 20%. Until interest rates outpace inflation, until the debt of the U.S is reigned in, until the U.S economy turns around, until the creation of money and credit subsides, until annual gold production increases by 50%. Until all these reasons come to fruition gold will be deemed a viable alternative currency. But I am sure these facts are not what u want to hear since your mind is made up and that trumps any reality presented to you.

#149 Another Opinion on 05.06.11 at 1:56 pm

No not twelve. I do find it funny the way you always bash the metals at the times when they’ve been sold off.
I wouldn’t have expected that from you, but hell it’s your blog.

#150 Midas on 05.06.11 at 1:56 pm

Re Ag, the smart money was already out before the plummet. The sentiment for the precious metals was way too high to sustain the bull run. Sentiment is still too high.

Buy when the sentiment is bearish. The bull run will continue. What you saw recently is not the bursting of a bubble. You’ll know the bubble is about to burst when junior exploration stocks rise through the roof, and people are lining up around the block to buy Au or Ag.

#151 Paul on 05.06.11 at 1:59 pm

Hey DA, come out come out where ever you are. Is this real?

#152 bcPaul on 05.06.11 at 2:02 pm

Here, check out this front page story from castanet:

Housing sales down 32% to 53%

In the month end report for April the Okanagan Mainline Real Estate Board (OMREB) states that both listings and sales fell. There were 24.25 per cent less listings than last year and unit sales were down 32.35 per cent dropping form 439 sold in 2010 to 297 this April. In dollars, the April sales were almost $110 million compared to just over $178 million for last year.

The numbers are even lower in other areas. In the North Zone, covering: Vernon, Falkland, Armstrong, Enderby, Spallumcheen and Cherryville. Were down even more to 53.49 per cent. Only 80 homes were sold in the area in April this year compared to 172 in April, 2010. In the Shuswap Zone sales volumes were down 40.44 percent.

#153 Abitibidoug on 05.06.11 at 2:02 pm

Reply to #146 by Betamax: What you say absoluetly makes sense. Why don’t more people see it? When gold peaked in 1980 at $800 per ounce (about $2300 if adjusted for today’s dollars), I was a teenager and didn’t know much about economics at the time but recall people saying the same things as now, and lining up to buy the stuff. Where were they in 1999 when it was cheap?
As for real estate I am experiencing deja vu of 1989, complete with memories of the Exxon Valdez, the Hydro Quebec power blackout, talk of cold nuclear fusion and yes, real estate goes up forever because of increasing population and rich Asian buyers.

#154 GregW, Oakville on 05.06.11 at 2:14 pm

Hi Garth, re: your well water depth and most large rivers systems running off the highlands!

“The Council of Canadians has been working with local groups to help stop this open pit mine from being created because of the extraordinary impacts it will have on the community, the watersheds, Ontario’s food supply and on the drinking water of more than one million people which originates in this area.”

(Don’t forget all the people down stream too!!)

#155 daniel on 05.06.11 at 2:20 pm

Silver and Gold are money – they have been for thousands of years.

Fiat money always goes down to 0 (the US dollar is worth 1% of what is was when it was created).

The US dollar will go to .1%, .01% and down to 0.

It’s not different this time.

Yeah, the dollar at zero. That would match your creds. — Garth

#156 Macrath on 05.06.11 at 2:26 pm

#127 JB

How do you feel about the leveraged ETF’s out there like HDX?

I`ve been experimenting with a small hedge of HSD.TO
IT tracks well when the VIX is low. You definitely loose less on a day like yesterday. I figure it would give me some time to hit the sell button in a panic, but I could be dreaming in Technicolor.

I asked Garth that last week. He replied :

“A balanced portfolio contains a strong hedge element, which seems to elude most people here today. The key is multiple asset classes which are not correlated, many of which provide a predictable income stream. — Garth”

#157 Kitchener1 on 05.06.11 at 2:30 pm

Thought I would chime in on silver a bit as I have been reading a lot about it recently. Here is the skinny.

-started to go up to $48 very fast for no apparent reason
-Comex increased margins from 12K to 24K to hold a contract
-increased margins even as it was plunging
-weak hands got scared and dumped
-stop lossed in place made the downturn more memoriable
-Comex right now only has enough pyhiscal on hand for delivery of 6600 contract or 160Million dollars worth.

My tin foil theory, is that some group of investors were holding out for pysical delivery on May 1-2 and were either offered a nice premium to roll over their contracts, they refused so Comex should them who the boss is.

something i dont understand is that if someone or some country wanted too, they could easily make stupid money on silver. If they had a billion or 2 around
they could take delivery of it and during that time, keep putting in puts at $50-$55-$60 etc.. and make killing on it. Just like the Hunt brothers tried to in the 80’s.

Is it over? i doubt it, $50 to silver is what $1000 was to gold, its rare they go over these barriers in one try. But its when the stupid folks go all in that they get hurt. I wish i would have played that market from the 40-50 rise, i would have made a ton of money. I did play it on paper, just for fun but didnt actually invest in it as I didnt see it holding. The day traders had a field day with run up.

#158 X on 05.06.11 at 2:32 pm

As per the comments about Garth selling T-shirts…I think that is a great idea! I have no doubt that Garth’s humor would make them popular.

My contribution…. A t-shirt with Garth’s Face that simply say ‘investing’ below. (like the Charlie Sheen ones that say ‘winning’)

#159 Paul on 05.06.11 at 2:33 pm

Oh I see someone already posted my last link.

#160 USA Peso on 05.06.11 at 2:35 pm

The PM’s markets are very easy to understand. If Bernanke is right than gold is a question mark. If Bernanke is wrong and he pushes the USA dollar down say 50% than we may see gold at $5000, or $8000 per ounce in 10 years. I am old school and don’t think you can print trillions of dollars of money without consequences.

When you have the world’s largest economy and the reserve currency, you can do what you want. — Garth

#161 BrianT on 05.06.11 at 2:44 pm

#146Betamax-You are looking at paper as a constant when it is actually a variable.

#162 Industrial Guy on 05.06.11 at 2:45 pm

Today’s employment numbers sound great!!!! 54,800 new jobs ….wow ….good times are just around the corner, eh? Maybe not …. OK, so let’s look at these numbers a little closer …… 41,100 of the new jobs were part time. Oooooops that’s code words for Minimum wage, no benefits and no future. Your classic McJob. Well, the good news is … it’s something.

Most of the new hires are employees and not some vague “self-employment” replacement for a job. The numbers generated by all these Federal and Provincially funded instant entrepreneur programs have been less than thrilling and for many it was just a way of extending their unemployment insurance benefits anyway. We all do desperate things in desperate times.

Ontario has seen an increase of 157,000 jobs over the past 12 months. Funny, the hundreds of factory doors I drive by are still locked and more are closing. For a mere $22 Million you can buy the entire FORD plant in St. Thomas, Ontario. For an extra $3 Million you can have the field next to the plant also. The area is suitable for ..Oh …. a small regional airport (they have one already) . Housing? Nah real estate prices in the St Thomas area are depressed. The lack of any employment other than Government jobs may have something to to do with that. FORD St. Thomas employed 1,500 workers and the nearby and now closed Sterling Truck plant employed 2,000 workers. IF the CAW’s stats are correct .. every assembly plant jobs supports 5 to 7 suppliers jobs ….. up to an additional 22,400 jobs lost in a town of 36,110 ……. can you say Ghost Town??

Raymond forklifts closed its Brantford plant at the end of March …… 250 industrial jobs lost. Lots of metal fabrcators who provided assembles to that plant are closing too.

My favourite barometer of economic growth is electrical power consumption. After all, everyone uses electricity. Mid-day power usage in Ontario today is 16,040 Mega Watts. That’s not much more than we used during the depths of the recession. Ontario has over 34,000 M.W. in built capacity. Wholesale prices for electricity in Ontario have crashed again. and yet we’re going to pay more …. Why? We pay “Green” electricity suppliers outrageous prices when compared to what they receive in places like the USA. Thousands of Micro-FIT projects have been approved in Ontario. Too bad OPG, the electrical utility can’t afford to hook them all up to the grid without a Government bailout.
Visit the Independent Electricity System Operator web site and try not to get too angry, after all it’s only YOUR MONEY ….

In the rest of Canada real estate prices will decrease slowly over the next few years as increases in interest rates take all the steam out of the market. Here in South Western Ontario, we are heading for a significant if not catastrophic crash. Our economy was based on manufacturing and exports. We are tied to the fortunes of the US economy and our overpriced petro-dollar is killing us in our main export market. We will also continue to suffer as they transfer more of their manufacturing capacity to low cost developing countries.

Wanna buy a house in St. Thomas? Maybe two?

#163 new_era on 05.06.11 at 2:47 pm

I go to the bank once a month and take out 5 hundred cash for spending the entire month.

If I have to go back to the bank in the middle of the month, I have to justify to myself where the money went.

I don’t need much to live on and find a card can easily get out of control.

We do have only one credit card which gives us 2% cash back , oh and our Costco Card which also gives us cash back. We are never behind on our credit.

Unlike some of our friend whom has a lease car, huge mortgage, and all those expenses they accumulate up each month to keep up with the JONES and end up putting everything on credit.

Moral of the story is, you have to spend within your means. And cannot be a slave to the banks.

#164 Brad in Cowtown on 05.06.11 at 2:57 pm

“The gold/silver bugs use the same fallacious reasoning as RE pumpers: something has made huge gains for years, ergo it will continue to do so indefinitely and cannot crash back down. ”

Not true.
Gold and silver bugs continue to be bullish (long-term) because of underlying US economic fundamentals, most notably continued (eventual) weakness in the US dollar. The recent corrective activity in PMs is reflective of short-term US dollar strengthening, more than anything else.
RE bulls are a unique breed in that they continue to be bullish withOUT the positive fundamentals to support their outlook.

#165 Paul on 05.06.11 at 3:03 pm

Somebody asked if there was a labour movement.

Harper’s in for a rough ride.

#166 BPOE evil twin on 05.06.11 at 3:08 pm

Sorry folks..

BPOE is on a bit of a binge, and a bit paranoid.

He keeps running into buildings and asking if they have an elevator.

Not sure why…something to do with a meeting arranged with another of Garth’s bloggers.

Oh yeah..sold all my precious metal …..street rumours are ugly..and even my shoeshine person agrees.

#167 Mister Obvious on 05.06.11 at 3:08 pm

Garth & Dawgs, I’m sorry about the italics screw up. I’ll try to be more careful in future.

Regarding miniscule purchases with credit cards:
I also pay my card off every month without fail, so I too don’t incur a dime of interest. But I would never dream of holding up a line with my credit card fumbling when I could just plop down a loonie (or even exact change) out of my pocket for a tiny purchase.

But in a city where it’s considered normal to bark on a cell phone next to someone’s ear on the bus, wasting the time of other shoppers in line is quite acceptable.

And since I’m on a roll, I hate loyalty cards too. No, I don’t have air miles. No, I don’t have a membership card, No, I’m not interested in reward points, no nuthin’. Zip. I just want to make my purchase and go. Please. Give me good service and a good price and I will return. Honest, I will.

Man, it borders on harassment sometimes. But I guess that’s just me.

#168 Devore on 05.06.11 at 3:23 pm

#142 Cato

holding 20% of assets in physical gold is the insurance policy to protect wealth. Don’t hold paper gold, the gold held in many ETFs are an illusion and any physical supply held by these funds will probably end up being seized and sold at “fair market value” to the central banks.

This is the kind of reasoning I have long stopped trying to understand.

If gold is confiscated (or by any other word), it will become illegal for private persons to hold again. Then what good will be the pile you have buried in your backyard? It will be toxic for decades, probably even for your children and grandchildren, no one will buy it from you.

You seem to believe two conflicting ideas.

#169 CrowdedElevatorFartz on 05.06.11 at 3:35 pm

@#49 desperate wife from Ft Mac.
Divorce him. Take half. Marry Me.

#170 CrowdedElevatorFartz on 05.06.11 at 3:46 pm

BPOE (Butt Pilot on Elevator) its time….
I’ll meet you in Richmond after 5pm. At our “favourite elevator place”. Wear the tear away pants. You know how gassy I get when I’m frustrated. See you soon ………

#171 bill on 05.06.11 at 3:47 pm

for some of us silver has to go down to $9.00…. I think i will stay with my silver mine bought equally cheap till the interest rates start to climb in earnest.its very volatile and thus easy to get burned…although it looks like a bit of upside left before it does what garth says it will do. and it will. believe me.

i see only one commodity cheap like borscht these days and thats nat gas.
someday the masses will clue in into the fact that natgas makes a great car fuel.

#172 bill on 05.06.11 at 3:54 pm

”You’ll know the bubble is about to burst when junior exploration stocks rise through the roof, and people are lining up around the block to buy Au or Ag.”

it would be handy to have something to sell these guys….

#173 realpaul on 05.06.11 at 4:36 pm

Mmmmmmm….lets see…..’market’ drives gold and silver down and institutions, sovereign funds and central banks dive in and buy with both hands. Does that sound like a set up to you?

Having worked in the financial industry for decades I can attest to the fact that it lacks the clarity and honesty of the central yard at a maximum security prison. Anyone who thinks that skullduggery does not ABOUND….is simply……………simple.

#174 Steven Rowlandson on 05.06.11 at 4:38 pm

Garth as an investor I have not lost a thing that has any value. Not a thing! Fiat currency is an unbacked statistic and nothing more. The paper silver investors were investing in paper on credit and not in silver. Basicly they got skinned alive in a paper market scam run by the elites and that is all that happened.

Oh sure the statisics look a little different but he who has silver has lost nothing of any real value.

Real estate is priced in worthless official statistics.
Therefore the price is meaningless and any financial losses due to the bubble bursting are shruggable.
Never pay too much again for a house people.
If you must buy a house just pay cash and don’t borrow.


#175 jess on 05.06.11 at 4:46 pm

The Food Bubble
Greed Inc: A special investigation into pollution, dubious tax practices and exploitation of African workers at Glencore Daily Mail,1


“Munich prosecutors plan to file embezzlement charges against all members of Bayerische Landesbank’s former board….”

#176 Cato on 05.06.11 at 4:59 pm

#167 Devore – I highly doubt gold will ever be confiscated, but the custodians/owners of the Gold ETFs (BlackRock, JP Morgan, Goldman et. al.) will simply make a side deal for their own benefit to hand over physical holdings and liquidate ETF at fair market value to various central banks.

Biggest reason to avoid the ETFs is lack of transparency – no-one has independently audited GLD so investors have no idea what value of holdings are synthetic and which are physical. The naked shorting that occurs in all the major bullion ETFs should be a clue that not all fund assets are physical.

#177 J Singh on 05.06.11 at 5:00 pm

Buying opportunity.

On a side note, my portfolio only dropped by about 3% in the last couple of weeks.

#178 Hoof - Hearted on 05.06.11 at 5:10 pm

#161 Industrial Guy

It’s all BS

When I read that article about an IVY league Law school grad that is in debt to the tune of $250,000 , and his Law School claims 90+% of grads have jobs..THEN it takes an investigative journalist to expose that Law School grad flipping burgers part time is statistically a “job”………..I think that after realtors have their judgement day Insitutes of Higher Learning are next re PIMPING dah STATS expose’.

#179 SmarterThanYouLook on 05.06.11 at 5:18 pm

#15 Carp

“Realtors took my wife out to the spa to see if we are jumping back into the market. The lady admitted the market is slow this spring and whispered I may have right to sell at a lower price last December.”

It’s funny that you believed the realtor.

#180 ballingsford on 05.06.11 at 5:26 pm

#14 Lynette

Sorry, but I’m first. It’s Friday folks, so let’s have some fun. It’s been a busy week!

#181 Jon in Cowtown on 05.06.11 at 5:30 pm

Bravo arctodus (#119), I love Garth’s daily musings and do believe he’s bang on when it comes to real estate. However, just as with you, the one place I digress is when it comes to his implicit faith in continued happy investing providing you’re a clever clogs like he is. The juice that has fueled (pun intended) our modern financial system is cheap energy. Them days are over and with it ever expanding capital markets, continued growth and appreciating real estate. So he has one part of the equation right but not the rest. No doubt there is a successful investment strategy in an economy that is going to keep contracting for decades if not a century but I don’t know what it is …..well then Liquidation World does come to mind.

#182 tkid on 05.06.11 at 5:40 pm

It sounds like the buying and owning of silver is becoming a form of protest. Don’t like the way the government is spending your taxes? Buy silver!

#183 poco on 05.06.11 at 6:05 pm

#156 Kitchener 1–
Is it over? i doubt it, $50 to silver is what $1000 was to gold, its rare they go over these barriers in one try. But its when the stupid folks go all in that they get hurt. I wish i would have played that market from the 40-50 rise, i would have made a ton of money. I did play it on paper, just for fun but didnt actually invest in it as I didnt see it holding. The day traders had a field day with run up.

Actually the day traders didn’t have a field day on silver stocks on the run up to 49+
both gold and silver stocks became “disjointed” from the run up since about the second week in April

look at the charts for the bigger silver stocks on the tsx–SLW–SSO–PAA– and you’ll see what happened—the stocks didn’t follow the upward trend as they had been doing
i sold the last of my stocks on Apr 8–SLW(silver wheaton) @44.50–it hasn’t closed anywhere near this level since and closed last Friday @ 38.50–that’s with the quick $7-$9 run-up in silver—it’s down further this week with the big drop.

So be careful what you wish for, playing the big run-up does not always mean you’ll make a killing in the market

#184 ballingsford on 05.06.11 at 6:13 pm

I’ll be going on a nice vacation to PEI this year. Me, my spouse and 3 1/2 year old son. Renting a cottage, flying to PEI and renting a car.

Some people say “Why are you flying when you can drive since you have a brand new car?”

I say “because I don’t want 4 days of that vacation to be spent on traveling (2 there, 2 back). A 2 hour flight works better.

I used to be able to make the 15 hour trip to PEI in one day but I’m not as young as I used to be and I prefer to do it in 2 days.

Anyway, the bottom line is that I currently rent and I can afford this trip and when it’s over, I don’t owe a nickle to anyone.

Enuff said!

#185 AgAu on 05.06.11 at 6:51 pm

Maybe – that was the case with UK 80 years ago
When you have the world’s largest economy and the reserve currency, you can do what you want. — Garth

#186 SRV ES339 on 05.06.11 at 7:01 pm

So you’re now a precious metals (instant) expert too are you Garth… maybe there’s some truth to those stories about you regarding R/E (but I’m with you on that one).

So, some didn’t take your “expert” advise and sell their PMs… tell me, did you have the inside scoop that the CME was going to raise Comex margin requirements five times in eight days (unprecedented), or that the banks were going to be tipped off about bin Laden and sold off silver by $8 (15%) in 13 minutes Sunday at the openning (5 hours before the world new about OBLs demise)… much more, but this is a R/E blog.

I’ve been trading PMs for a few years now and this is not even close to a bubble pop… it was an orchestrated, criminal, act by a very powerful group with the power to change the rules with a phone call (the head of the CME is a former Goldman VP, as is the head of the governing body… the CFTC). The margin increases (two were announced Wed night at one time to drive the final nail in the silver market) removed the liquidity from the market causing the commercial investors to liquidate PMs and other commodities to meet the margin calls, bringing an entire sector down.

And of course I lost a lot of money (thousands on margin would have neen wiped out completely but nothing will ever be done because, as usual, the big boys made out like bandits and that’s all that matters), but only a small percentage (I do not margin) of what I’ve earned, and I am quite aware of the games and dangers in the market… this is simply part of doing business in the sector.

I’m sure you’ll make note of how wrong you were when
silver goes through $50 again before the end of the year… just like you’ve corrected your call to buy US real estate just a few months ago… oh wait, you forgot to do that didn’t you (an oversight I’m sure).

You seem to epitomize the rabid metalheads these days – steeped in conspiratorial theories, iconoclastic, fringe, angry. God help ya. — Garth

#187 Devore on 05.06.11 at 7:08 pm

#175 Cato

Biggest reason to avoid the ETFs is lack of transparency – no-one has independently audited GLD so investors have no idea what value of holdings are synthetic and which are physical.

All GLD holdings are either physical or future delivery contracts. The mechanisms are clearly spelled out in the prospectus.

The naked shorting that occurs in all the major bullion ETFs should be a clue that not all fund assets are physical.

There is de-facto naked shorting in all ETFs, to one degree or another. Some ETFs have short interest in the 100s of percent. How is that possible?

Because of the way ETF units are created and redeemed, ALL ETFs with short interest are just fractional claims on the NAV. In adverse market conditions, unit holders could be literally left with units backed by nothing, if major institutional redemptions take place. Always know what you are buying.

#188 S.B. on 05.06.11 at 7:16 pm

Suspicious McMansion reno fire…

Arson may be the cause of Thursday’s massive fire that destroyed a St. Clements Avenue house that was under construction.

Toronto police say a surveillance camera in the area recorded footage of two males running from the house shortly before the fire was noticed at about 2:30 a.m.

It took fire crews about three hours to bring the flames under control.

#189 betamax on 05.06.11 at 7:19 pm

#147 TheBigLebowski: “Until all these reasons come to fruition gold will be deemed a viable alternative currency.”

By whom? Currency, no. Store of wealth, sure. And it rightly went up as the dollar went down. But, like many bubbles, what began due to fundamentals evolved into mass perceptions, self-perpetuating, which led to over-buying and over-evaluations. Bubble territory.

#163 Brad in Cowtown: “Gold and silver bugs continue to be bullish (long-term) because of underlying US economic fundamentals, most notably continued (eventual) weakness in the US dollar.”

I understand, but that ‘fundamental’ is based on assumptions and predictions which may or may not be correct. Or may be correct, but to a far lesser degree than PM bulls expect. In the most recent financial crisis, the mass flight to safety was *to* the US dollar and it strengthened thereby. Things don’t always go according to how we think they’re supposed to.

“RE bulls are a unique breed in that they continue to be bullish withOUT the positive fundamentals to support their outlook.”

Sure, but RE bulls argue they have fundamentals on their side — immigration, inflation, new paradigm, etc. Every participant in a bubble always has a story to justify what are otherwise obviously irrational prices.

I don’t find the goldbug rationale convincing. It explains why gold went up but IMO doesn’t justify current prices nor preclude the existence of a bubble.

I see the potential to still make a lot of money in gold, but I also see the potential to lose a lot of money in gold. Like Abitibidoug above, I’ve seen this movie before and it didn’t end well. I prefer to invest my money in things that have a smaller downside. I keep more of it that way.

#190 CalgaryRocks on 05.06.11 at 7:25 pm

#164 Paul on 05.06.11 at 3:03 pm
Somebody asked if there was a labour movement.

Harper’s in for a rough ride.

On the other hand, he may not get a rough ride from the people that pay these (un)civil servant’s inflated salaries and ridiculous perks.

An example, getting double paychecks when taking vacation because ‘Vacations are expensive’. boo, hoo, life is so rough, lol.

Personally, I will vote for anyone that makes these guys stand on a street corner in mid January. I will see it as a sign of success rather than defeat.

#191 randman on 05.06.11 at 7:26 pm

“When you have the world’s largest economy and the reserve currency, you can do what you want. — Garth”

Not without consequences

#192 Daisy Mae on 05.06.11 at 7:40 pm

“So Canada created +58,000 plus jobs in the monthly report released this morning, yet the BOC still has rates at all time lows…”

I understand they were part-time jobs…

#193 Hoof - Hearted on 05.06.11 at 7:44 pm

Jack Laytons enlarged MEMBER – ship

OTTAWA — The search continues for Ruth Ellen Brosseau, the New Democrat MP who took a trip to Las Vegas during the election campaign and will now make an annual salary of $157,000 as a member of Parliament.

Brosseau won the Quebec riding of Berthier-Maskinonge on Monday despite the fact she doesn’t speak French well and didn’t mount much of a campaign. The single mother works at a campus pub at Carleton University in Ottawa and lives in nearby Gatineau, Que., about 300 kilometres southwest of the riding.


This should be extrapolated upon..

If we expand Parliament by say, 100,000 seats , we get far more accountable Gov’t , increase the GDP, and reduce unemployment

#194 Edmonton Here! on 05.06.11 at 7:50 pm

I never hear much about not only the boom in Real Estate created by the 40 year nothing done mortgage our conservative Government created in 2006, (and continued on in 2009 with historic low interest rates). But, the building quality nightmares that are unfolding that are sending bankruptcies soaring for the businesses that were involved with the construction of this below par defective condo & houses as well as the owners who can’t afoord the assesments ranging for $20,000 to $100,000.
Here in Edmonton we’ve had a whole slew of wooden walk up building built in a “california Courtyard” design. Most of the buildings being built have had a huge mold problem in all the buildings due to NO MEMBRANE on the exterier and the stucco being applied directly to the particle board. There is NO standard for the “building envelope” here in alberta so hundreds of condo owners are out of millions of $$$ with no recourse.
Recently in Fort McMurray several condo buildings with hundreds of units have been forced to abandon their condo units as they’ve been deemed usafe due to structual & fire safety concerns involving poor construction.

Imagine buying a two bedroom walk up condo unit in heelish for Mac for $399,000 then finding out a few months later you must abondon it due to unsafe structual conditions, and must keep apying your mortgage *& condo payments! No lwas to protect the consumer. The companies declare bankruptcy & open up a new company under a different name!
No wonder I’ve seen the standard of living collapse in ALberta my native home province. Everyone thinks we’ve had a boom here, but the drastic price increases we’ve seen in everything do to put business profits before the peoples welfare & rights has put us into a type of in=faltionary depression in a way.
A massive real estate correction here (which appears to be starting), will be the best thing that’s happened ion Alberta this decade. The way things have gone here homelessness has soared while thousands of condo units remain empty in highrises that did presales 6 years + ago & still can’t sell!

#195 BPOE on 05.06.11 at 8:33 pm

Folks, I’m a total ass bagger! What was I thinking? Oh yes! I “accidentally” lied to you again. Folks, folks, I lie all the time, folks. Folks, I just can’t help it, folks. I’m too stupid and pathetic, folks, to understand that real estate prices have gone up in Vancouver, folks. But, folks, what, folks, you need to know, folks, is that what I am failing to mention is that we are in a bubble! Folks, see the real estate prices have gone up, and that is a FACT! What I keep lying, folks, to you about is that prices are coming down, folks! That’s because our prices went too high for sustainability, folks, folks, folks, folks! I cannot help it. I am a scum bag, low life Realtor with a 9th grade edjewkashun. I am jealous of people on this blog because I can’t afford my home, folks. My home is drowning me in debt, folks. I’m a loser, folks. Folks, can you help me to stop being a sociopath? I am pathetic. Sorry! Now, off to the steam rooms to find me some lovin’ tonight!

#196 Dylan on 05.06.11 at 8:46 pm

this is not a bubble popping in silver…i’d put this more as silver has been on a bender for the last 6 months and just put himself in AA for a couple weeks to sober up….

this AA attendee will relapse … silver is going to keep going….same goes for gold.

I think you are bang on with Real estate though…live in vancouver and looking forward to a drop so I can actually afford a house

good luck to all out there…

#197 BPOE on 05.06.11 at 8:51 pm

I am First

#198 BPOE on 05.06.11 at 8:51 pm

and second

#199 BrianT on 05.06.11 at 8:52 pm

#185SRV-What you have said, although accurate, is politically incorrect and not appropriate on a blog where small children or housewives might have access. Authority figures don’t act in their interests, they act in your interests-that is the first thing we need our kids to learn in school. Re the burial at sea-I saw that one on the Sopranos

#200 BPOE on 05.06.11 at 8:54 pm

And some more jokes!

(Q) There is a Real Estate Investor, a Lawyer, and a Realtor (me, BPOE). You have a gun with two bullets…
Which should you shoot?
(A) You should shoot the realtor (me, BPOE) twice… Just to be sure!

And another!

The Devil tells a realtor, me, “Look, I can make you richer, more famous, and more successful than any Real Estate Agent alive. In fact, I can make you the greatest agent that ever lived.”

“Well,” I said, “what do I have to do in return?”

The Devil smiles, “Well, of course you have to give me your soul,” he says, “but you also have to give me the souls of your children, the souls of your children’s children and, as a matter of fact, you have to give me the souls of all your descendants throughout eternity.”

“Wait a minute,” I said, “What’s the catch?”

#201 SRV ES339 on 05.06.11 at 8:56 pm

You seem to epitomize the rabid metalheads these days – steeped in conspiratorial theories, iconoclastic, fringe, angry. God help ya. — Garth

I guess I win my personal bet that conspiracy theory (the standard attack of anyone with an alternative view of the world or major events) marginalization would be your defence Garth. And your “knee jerk” read on me is as flawed as your PM knowledge. I’m a retired 61 year old Aerospace Engineer / President, that happens to know a thing or two about precious metal investment, and the macro econonic factors that make them a sound investment given the fraud, corruption, and greed that passes for a financial system in today’s society… but thanks for the “expert” assessment… lol!

Wow, a 60ish engineer executive. I’m awed. You are still spouting nonsense. — Garth

#202 john m on 05.06.11 at 9:06 pm

#191 Daisy Mae on 05.06.11 at 7:40 pm

“So Canada created +58,000 plus jobs in the monthly report released this morning, yet the BOC still has rates at all time lows…”

I understand they were part-time jobs…<<<<<<<< it happens every April and a large percentage are migrant farm workers (over 18,000 in Ontario alone)…just another Gov't snow job!

#203 Jeff on 05.06.11 at 9:18 pm

Garth, I read your blog but rarely ever post. I do agree with your views on real estate but think that you should not venture into making comments about precious metals as your clearly out of your league on that one.

Look how quickly silver appreciated in the last few months. This drop is healthy and even more reassuring than a constant climb to the top. I bet if we asked the readers of this blog, how many of them owned physical gold or silver that the answer would be shockingly small….and the same would go for the general population. So tell me how can something be in a bubble if barely anyone owns it??? not to mention all of the other reasons…check the price again in a few months or even next year and then make up another way to make fun of the “metalheads”.

Each of my last three books have argued for a PM position in personal portfolios. You should read one to discover why. But being overweight in silver or gold right now is like being in a bidding war for a Vancouver crack shack. You will discover this. — Garth

#204 BPOE evil twin on 05.06.11 at 9:34 pm

As one can see, BPOE is still lookink 4 luv in all the wrong places .

We tried e-harmony, but the computer match kept indicating sheep, 2 litre soda pop bottles… or road- kill.

However, confession is good for the soul, and BPOE is hopefully on the road to 49.9% recovery

He has a bright future as a Bloc MP, or NDP masseuse.

#205 Nostradamus Le Mad Vlad on 05.06.11 at 9:36 pm

#57 BPOE — “Renting = Family Shame and Disgrace”

Also, no property taxes to pay, no ‘unexpected’ emergencies (such as burst water pipes), no payments for interior / exterior maintenance, etc.

One can put extra cash aside in investments — a broad-based portfolio — lock the doors, tell the landlord / lady you’re going away on vacation for a few weeks on vacation, and not be concerned with external events over which no one has any control (such as a drunk driver ploughing into the home).

Sure, owning is better than renting, as long as there are gazillions of dollars to pay for all this stuff. I would just as soon rent, and not have the headache of owning and mpwing the snow, shovelling the lawn anymore.

#103 hoe H — Good, straight-to-the-point post.

#172 realpaul — “Does that sound like a set up to you?”

Exactly, and right on cue. Central banks have been meddling in PMs for a while now, and some of the more astute writers on various blogs have realized it.

When JPM decides to sell their 80% copper holdings in London (they bought it a few months ago when the price was relatively cheap, then it skyrocketed) and take a honking great profit, that will be the moment to sell PMs, let them go to zilch then buy back in.
11:23 clip One year ago. History rhymes and repeats.

Dead Nemesis At least he is serving two final purposes — hastening a police state in the US, and jumpstarting Obama’s re-election campaign. 2:04 clip Dead Nemesis II. Treated in a US hospital for kidney trouble, from which he would die in Dec. 2001.

Greece out? Anything (like Iceland) is possible. Greek clashes Docs fighting mad. Who will treat the docs?

Egypt and Israel Once friends, now becoming enemies?

10:03 clip Premonition of 9-11, or had it already been pre-planned and dubya was letting his buddies know via TV?

Obama Look out for Harper — he is a sly fox, esp. now he has a majority.

GW “The carbonazis are at it again. Crude oil flooding the fishing grounds of the Gulf of Mexico is not a problem. Radiation pouring into the fishing grounds of the North Pacific is not a problem. 1/4 of all farmland in the US now mandated to serve the ethanol boondoggle is not a problem. Hundreds of thousands of acres of farmland being flooded (intentionally in one case) with toxic industrial waste is not a problem. Lower yields from genetically modified crops is not a problem. Higher prices due to lower dollar is not a problem. Higher prices due to higher fuel costs due to war on the oil nations is not a problem. Yessiree bob, we are to believe that the only reason for higher food costs is global warming and we need to pay Al Gore a carbon tax if we want to eat tomorrow.”

#206 45north on 05.06.11 at 9:43 pm

Edmonton Here: Most of the buildings being built have had a huge mold problem in all the buildings due to NO MEMBRANE on the exterier and the stucco being applied directly to the particle board.

I just read DuPont’s page about Tyvek

it does protect the structure from moisture. It’s gross negligence to not put it up. Too late now.

#207 Utopia on 05.06.11 at 10:04 pm

#139 TheBigLebowski to #113 Utopia

Do you know how to decipher an 11 year chart ? I think its the cash you hold in your hand that has been a downside crapshoot for the past decade and counting.

Let me see…yup, I still have my cash. You just lost a minimum 25% on your investment in 3 days on Silver though.

I collect dividends to be reinvested. Gold and Silver stocks tanked. Some fell up to 40%. Do I have regrets? No I don’t Mr Lebowski because I have been there before and I already learned that all of the same hype you gold-bugs are eating for breakfast today is exactly the same nonsense that was pumped out in the late 70’s. Nothing has changed except the people like yourself who foolishly buy all the one-liners.

There is certainly money to be made, don’t get me wrong. I have invested in it too. But it is not long-term reliable and it can turn and bite you on the ass at any moment. Like yesterday.

You are in a risk trade my friend, not an investment and it is blind speculation because you have sold yourself on the idea that it will go on forever and ever and never end. You will be rich! (Not)

It always ends badly for Gold. Don’t you get that yet?

#208 Utopia on 05.06.11 at 10:13 pm

What I find incredible Lebowski is that you did not learn anything at all after taking a drubbing these last few days.

This is not the last time metals will kick your ass either. Watch and see. Meantime, don’t ask me about charts. You see, I do read them and I do not fall for the fantasy you so easily oblige. If you are so right, then why do you think that the vast majority of pension and mutual funds and even many hedge funds shun metals? Hmmm?

I bet you think they are all idiots. Only you are the genius. As already pointed out in my previous post, they still have their money today.

You do not.

#209 Abitibidoug on 05.06.11 at 10:38 pm

There’s much talk about gold as an investment here. If it’s such a great investment, why were some countries selling off their excessive reserves from 1997 to 1999? Better yet why didn’t they buy gold then, when it was cheap, and sell off their reserves now when it’s expensive?

#210 Utopia on 05.06.11 at 10:48 pm

#185 SRV ES339 wrote….

“So you’re now a precious metals (instant) expert too are you Garth…”

Oh Brother! Here we go with another one. Are you so sure about the future price of Silver? Let us all know when your target is reached and you “recover” from your recent (earned) loss.

One of the problems with you Silver bugs is that you cannot accept that there are consequences to your actions. Many of you brag about being the force that will take down one of America’s biggest banks. The JP Morgan silver short is your one big opportunity at success. WTF is that about?

Did you actually think that would run smoothly without any conflict or reflexive retaliation in how the rules are made? And what reward do you really get by destroying a major bank and investment house anyway?

Oh Boo Hoo Hoo. They changed the rules on you because the CME has recognized the tremendous risks in an asset class going parabolic while the global economy is slowing.

Cry me a freaking river too that others stepped in to limit the damage to the financial system that your ilk would gladly destroy for……..for……..for what? What reason friend?

I bet you don’t even know. Some of you gold and silver bugs are just plain idiots.

#211 on 05.07.11 at 2:04 am

” If you can’t take responsibility for your decisions, and if you don’t want to increase your financial education, you should not be a part of this group ….”

#212 Evangeline on 05.07.11 at 4:58 am


I am not a metalhead but isn’t using “past performance” as a basis for future performance an investing fallacy? I don’t think your comparison to the seventies works because the world has changed so much since then. Globalization means we are now interacting financially in a big way with cultures and economies that value gold a whole lot and that have quite a bit of clout to move markets.

#213 S.B. on 05.07.11 at 10:52 am

Award for longest comma splice goes to:

112 Dontcallmeshirley on 05.06.11 at 10:35 am
Garth, say it ain’t so.

Your silence, when Flaherty criticized Layton for musing he might influence the Bank of Canada governor, was deafening.

#214 TheBigLebowski on 05.07.11 at 1:38 pm

207 Utopia.

I feel just fine after last weeks correction. I am a long term investor not a trader. here is a main holding I have had for several years. Another “Long Term” chart for you to discredit.

#215 TheBigLebowski on 05.07.11 at 1:46 pm

209 Abitibidoug

Great question. The simple answer is. They were selling off gold to suppress the price , hence to mask the inflation that was being pumped into the system through money and credit creation. What has happened now is they have essentially run out of physical gold to sell into the market. The paper gold derivatives can be sold in the market to create a smashdown that lasts several days but then the metals will turn around and head right back up. It has been a co ordinated effort over the past 15 years by central banks to mask the inflation that has been pumped into the system

#216 realpaul on 05.07.11 at 7:57 pm

What commodity rout…the big players are scrambling for physical supply while paper traders puke out losses.


“Gold and silver traders in India, the world’s biggest buyer of bullion, scrambled for supplies as they braced for strong sales for a local festival, pushing premiums higher.

Traders said interest in silver rose as prices declined 21 percent from their peak of 73,600 rupees per kg.”

Also, don’t forget to catch the latest sales numbers from the US Mint:

“Buyers of physical silver appear to be swooping in as paper traders are scared out of the market. The U.S. Mint reports sales of 701,900 Silver Eagles so far in May — during a period silver has tumbled more than 20%.
At this pace, sales could reach 4.2 million by month’s end.
In the Eagle program’s 25-year history, that figure’s been exceeded only twice — last November and last January.

Gold Eagle sales are looking strong too — 35,500 ounces of coins so far in May, which is well ahead of last month’s pace, when sales totaled 160,500 ounces.”