Soros: Gold is a Bubble. Buy it.

[hayekvindicated]

Re: Soros: Gold is a Bubble. Buy it.

Good luck to you, sir.

Thanks Chris.

[blazespinnaker]

Re: Soros: Gold is a Bubble. Buy it.

A series of investments in land development in India. Can't get more specific than that. Gold may go 10 fold from here but that will be a modest return relative to what I intend to make on the land investments within the next decade.

India? No DOUBT. You're poised.. Any chance we get in on some of that action?

[hayekvindicated]

Re: Soros: Gold is a Bubble. Buy it.

India? No DOUBT. You're poised.. Any chance we get in on some of that action?

Unfortunately, if you're a foreigner, its almost impossible.

I thought about it for a year. I didn't want to sell my gold but then it made total sense. In the area where I am buying, prices have dropped 60 percent from last year. The price at which I am buying is about $2 per square foot - it is close to a major city and developing fast - but the market is currently in a slump due to liquidity issues in the local market.

Other interesting factors: the number of people who can invest in the market is tiny. 99.9 percent of Indians and all foreigners are locked out due to the local issues - the laws as to title, problems with getting a seller who has not already "sold" it to several people, avoiding fraud etc. The long and short of it is that this is not a market flooded with billions of investor dollars from international markets. This will ultimately change when the city is fully developed but at the moment it is not.

If you think about ANY investment discussed on this forum, those are investments that are in markets which are accessible to global investors. As an Indian, I would never touch the SENSEX unless the market had a crash like 08 - how many international investor BILLIONS are invested in it? Look at the S&P or the US Treasury market or even gold. These are markets with enormous pools of global capital already invested in them. By definition, they cannot move by extreme ratios because there is only so much additional money that can pour into them.

Land in an insulated country like India with additional headaches about title, the ability to guard it against squatters etc - is the total opposite. Until the city is fully developed, large pools of capital cannot and, by definition, do not get in.

So gold may make extreme moves but they will be piddly compared to this. And it has been done before. My family bought some land back in the mid- 1980s for pennies near a develping city that is now worth 300 times more (in US$ terms). The moves here will be more extreme because economic growth rates in India were a lot lower in India in those days.

I am buying this as a long term investment of course. I might ultimately develop the property if the demand is tremendous. But for the moment, its a "haven" for my capital.

[GRG55]

Re: Soros: Gold is a Bubble. Buy it.

...Other interesting factors: the number of people who can invest in the market is tiny. 99.9 percent of Indians and all foreigners are locked out due to the local issues - the laws as to title, problems with getting a seller who has not already "sold" it to several people, avoiding fraud etc. The long and short of it is that this is not a market flooded with billions of investor dollars from international markets. This will ultimately change when the city is fully developed but at the moment it is not...

Doesn't that situation [bolded above] have to change before you can actually realize any material price appreciation? How exactly does a "developing city" eliminate problems you describe such as "the laws as to title, problems with getting a seller who has not already "sold" it to several people, avoiding fraud etc..."?

What you describe you are doing strikes me more as a speculation, albeit perhaps an intelligent speculation given your knowledge and circumstances, than an investment...

[hayekvindicated]

Re: Soros: Gold is a Bubble. Buy it.

Doesn't that situation [bolded above] have to change before you can actually realize any material price appreciation? How exactly does a "developing city" eliminate problems you describe such as "the laws as to title, problems with getting a seller who has not already "sold" it to several people, avoiding fraud etc..."?

What you describe you are doing strikes me more as a speculation, albeit perhaps an intelligent speculation given your knowledge and circumstances, than an investment...

I grew up in the city. I know a lot of people well and can find sellers who would be able to give good title. I have family who can look after the property and take precautions against squatters. You need people on the ground otherwise you cannot invest in any land in India (or even developed real estate).

The issues around title are much worse if you are a retail buyer. Big builders in India have ways of avoiding those problems and so, if you are a seller and find a builder willing to buy, the sale is pretty straightforward.

Yes the city needs to develop more. But that is the whole point. You can't make excellent returns if you buy land that is already well developed and costs $500 a square foot.

Speculation? What is not speculation in life? If anything, this is the least risky form of speculation. Land does not go to zero. Stocks do. Bonds can become worthless. And in the long run, in densely populated countries particularly, unless one is buying in a bubble, land beats most investments as an inflation hedge. But the key is obviously to not buy in a bubble. A country with a shrinking economy and/or a declining population is a no-no for land investment.

[hayekvindicated]

Re: Soros: Gold is a Bubble. Buy it.

Doesn't that situation [bolded above] have to change before you can actually realize any material price appreciation? How exactly does a "developing city" eliminate problems you describe such as "the laws as to title, problems with getting a seller who has not already "sold" it to several people, avoiding fraud etc..."?

What you describe you are doing strikes me more as a speculation, albeit perhaps an intelligent speculation given your knowledge and circumstances, than an investment...

Here's Faber on the subject.