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Posts Tagged ‘Santorini’

And they say gold is going sideways…..

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This is what the bankruptcy of a western nation looks like…do you really want to run to a dollar?

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This is a wonderful house centrally located in Fira with caldera view.  It is 280m2 in size and is actually comprised of two homes, one on top of the other.   The home has a courtyard, area for roof garden.   Bedrooms and livingrooms with high 5m cielings, and lofts in both houses.   The home needs repairs but is structurally sound.

Price 670.000 euros firm, Reduced from 800.000

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A little visual aid from Mark Lundeen compating the current gold bubble to the stock market bubble from 1980-2000, we aint seen nothing yet.

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by Christopher Laird, PrudentSquirrel.com | April 7, 2010

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Something big is up, and it’s possible the Euro is going into a real crisis within two months…Is this the next big market surprise ala Lehman? Not exactly like Lehman, but of the scale of that crisis that shook the entire world and almost caused worldwide bank shutdowns in Fall 2008? I am beginning to think so, and have been discussing this looming new worry for subscribers, IE we are right at the cusp of something big for the Euro and the European Union, not only financially but very much so politically. Imagine what a real Euro crisis would do to – everything!

Alert that Euro on verge of real crisis

We are so concerned by recent developments with Greece as a canary in the coal mine for the Euro that we just issued an alert to subscribers that we foresee a big blow up for the Euro in about roughly one month’s time. That is USD bullish and gold bullish, and bearish for about everything else out there. And this has many other implications for US Treasury bonds, the China Yuan revaluation issue and many others. This Euro situation is a huge potential bombshell, possibly outgunning all previous huge crises we faced over the last 2.5 years. That’s right, the Euro situation can outgun all the worst financial chaos we have seen so far, and lead to massive currency instability worldwide. This is a big deal if it happens as we foresee.

If you noticed in the last week or so of trading days, the USD and gold often went up together. Gold and the USD are fundamentally inverse, the USD pricing most commodities, even gold if you will – especially gold. That particular gold / USD inverse is tied to the fact that the USD is still the world’s paper reserve currency still and is not losing that status yet – and gold is the world’s precious metal reserve currency.

When the USD and gold rise together, trouble is near

Now, when both rise together, you can be assured that flight to safety and liquidity/cash is in effect…

The biggest reason for the USD rising at this time is flight to safety due to concerns about the Euro. And money coming out of emerging markets that are peaked out and falling. The Euro makes up over half of the US Dollar index currency basket. So, when the Euro has trouble, the USD is the biggest beneficiary along with gold.

‘This Ain’t happening.’

It became clear last week that the EU bailout with the IMF for Greece was basically hot air. Greek bond spreads rose last week to their highest level versus Germany last week; the bond markets saying the proposed Greek bailout deal was just smoke and mirrors. Since this Greece story has been out for months, it became clear that all the Club med states and the so called PIIGS (I don’t like that term but everyone is using it to refer to those states, Portugal, Ireland, Italy, Greece and Spain) are even larger versions of the looming Greek tragedy, with even larger debt problems. And their time is running out this year too.

Must have $20 billion within two months

Why is Greece causing such a stir, its economy is small compared to say Spain, who is next in line in this crisis…? Because Greece has to refinance about $50 billion worth of bonds over the next number of months, a big $20 billion chunk due to roll over in two months. Greece is now at the door of insolvency.

The fact that the EU cannot come to terms with a relatively small bailout of $50 billion for Greece shows the internal dissention in the EU over the bailouts of the Club Med guys (PIIGS), with Germany finding it politically impossible to sign a deal. Greece is being left to its own devices. That ain’t good. Not good at all.

IMF solves nothing

Getting the IMF involved is viewed by markets as a last ditch effort, and reflects terribly on the EU monetary union and political union. It is said that using the IMF here merely confirms the political paralysis in the EU over this situation, and reflects terribly on the EU and the Euro. Major political paralysis is not something a major potential reserve currency can tolerate. Calls in Germany and elsewhere to kick out repeat EMU (European monetary union) offenders with huge financial deficits, Greece running something like a 13 pct of GDP deficit yearly. It’s going bankrupt.

Money is fleeing the country. A big surge of money flight to international banks in Switzerland, UK, Cyprus in the last week or so. In short, Greece is rapidly developing a sovereign bond crisis. That is nothing new, but the timing is, in light of the fact they need about $20 billion over the next two months. And money fleeing the country…is particularly worrisome.

There are many facets to this EU situation and they are bleak as hell for the Euro. This appears to be the next looming ‘big one’ crisis. We have kept subscribers well informed of potential outcomes for the Euro, and we also called the USD rally at end of Nov 2009, and a gold bottom in Dec 2008. We have made a lot of great currency calls way ahead (by months) of anyone I know of. We also called the 2008 summer commodity peak in April 08 warning the USD would rally, again months ahead of anyone I know of.

We have some basic defensive strategies to cover these potential events – a market crash and a possible Yuan revaluation. In any case, we have made some incredible calls for the last two years on the overall markets, calling huge swings in the USD, currencies, gold and commodity markets at key times, predicting trends that lasted 6 or more months out from our calls. There is a chart showing several of the major ones we called in the last 2 years on our site. Our newsletter is 44 issues a year with mid week email alerts.

Even though our newsletter is named PrudentSquirrel, it is probably one of the best currency newsletters for big currency calls you will find out there. The name reflects our ultra conservatism.

Copyright © 2010 Christopher Laird

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Stillness Fills the Air and the Sky is Darkening

The recession in the US is over, they say.   Well, from the front lines it don’t look too good to moi.   Yesterday night at the spectacular Good Friday procession in my gorgeous village of Pyrgos, we had about 20% of the normal amount of visitors.   These visitors are ususally Greeks from other parts of Greece but there are also usually many from other countries.    I dont care what they say, but I dont see the hotel requests coming in, the roads are empty and the visitors that do come are not spending money.   If you are smart you would short the over inflated HOT index and get prepared for a Greek default due to crashing revenues from the result of lack of tourists and the consequent closing of businesses.  I think that by October everyone will be sure that this debt load is unsustainable, the austerity measures wont suffice and that every thing will come crashing down for Greece.   The fire that will be burning will not be from  the lanterns which light up my beautiful Pyrgos on Good Friday, but the fire resulting from the crash and burning of the local economy and from the others who hold our debt.    

For those of you with cash, there will be some blue light specials happening in the local real estate market.  I know I said this last year and I was only off by one month….the only thing that didnt happen was for the local real estate  market to totally react to the debt crisis.   This winter it will.

cheers

n

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pirgos santorini good friday

6000 lanterns lit up for the Good Friday celebration in my village

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Regarding my article which I linked to in my last post (http://www.rieas.gr/images/NICKDINOS.pdf), I just want to clarify something.    As many of you may have gathered, I am a gold bug.  I am not a gold bug in the sense that I will hold gold forever, but I think that now is the time for gold.   Global currency debasement has brought us into an Economic winter which still has a long time to run its course.   We will get out of it but not for a while and not, perhaps, without a war or without a change in global monetary policy meaning a move to some sort of sound money.

Gold has been sound money for the last 6000 years and it is reasserting itself today.  You can see this in the price of gold valued in all currencies.   The rise has been phenomenal and we are not even close to where this game will finish.   You must realize that the Greek Empire based on gold money lasted 1000 years.   Please note that I am not talking about the classical greek empire but the Byzantine Empire.   This was the Greek empire which historians try to rub out.   (thank you Christos my dear friend for this insight). Sound money gave this empire a millenium of life, rather than fizzing out like the Roman Empire did due to debasement of its coins from silver to base metals.   Our western empire is meeting this same fate.   Sound money is all you need for a stable economy because people can save the fruit of their labor and have an incentive to work.

I had client come to my office to discuss the purchase of some real estate and the topic came around to the value of assets priced in gold.    We all know the effects of the recent hyperinflation in Zimbabwe but few non-Greeks know that we had a similar event here in Greece about 60 years ago.   My father in-law told me how he remembers families selling all their household furniture for a piece of bread.   My client told me something much more interesting.    He told me that some family friends of his purchased the entire block of downtown Athens which houses the ministry of the economy for three British Sovereigns during this hyperinflation period.    If you are not aware of the block of land, it is located close to Syntagma Square in Athens and is uber prime.  If I were to value this property today, I could conservatively put it at around 40M euros.   Let’s see now, one British sovereign sells now for about 220 euros and consists of 7.322 grams of gold (http://en.wikipedia.org/wiki/Sovereign_(British_coin))    So these friends of his paid 660 euros of today’s money for a 40M piece of land. 

Now either land today is overpriced or gold is cheap (or both).   Sure, easy credit raised the prices of real estate, and sure the recent CFTC hearings show gold is being manipulated to the downside but can these differences cause such a huge gap in property prices priced in gold?   Let’s say that the manipulation is to the point of 100:1 as the CFTC hearings revealed.    This means that the gold price in euros now would be about 82500 euros per ounce.   If 3 british sovereigns contain less than 3/4 of an ounce of gold, these buyers still got a great deal in paying only about 60000 euros for a 40M piece of land.    Now for the other end.  What if my conservative estimate for the land is wrong and we drop it by 60%.  This block of land would be priced at 16M euros….still a great deal for the buyers.   

Let’s see what the price of gold would be for that property if it were priced at and even more conservative 10M euros.  We said that 3 British sovereigns contain a bit less than 3/4 and ounce of gold.    This means that this property, in today’s prices, was bought at a gold price of about 14M per ounce!

What’s going on here?   Even with an inflated gold price, which takes into consideration central bank manipulation of the metal, and a reduction in the property price to an insulting current property value, we can not attain the deal which was made in that transaction.  The property was exchanged for gold at around 14M euros per ounce!    What happened to the theory that an ounce of gold would consistently buy a nice gentleman’s suit?   Not even Michael Jackson had such a suit!  What I’m trying to show in my “Buy one get 4 free article” is that in times of financial distress things fall out of balance, out of whack, and there is an opportunity in the pain and strife to make huge gains.  

The economic winter will be bad for certain assets and good for others but I think FOFOA said it best that there will be a time coming soon where there will be inflation in everything priced in dollars (currency) and deflation in everything priced in gold.  Gold will go up, real estate will go down, however my point in the article is that there will be an opportune time to make disgustingly insane trades when there is blood on the streets.

Cheers

n

www.santoriniselection.com  www.santorinirealestate.com

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