Gold, Silver and Real Estate

For years I have been wondering just which straw will finally break the camels back. From the looks of the "free fall" real state is in, I think I have found the answer.

The connection quite simply is 70% of the jobs that have been created over the last few years are a direct result of the real estate bubble. (That's right, BUBBLE!!). Additionally, the increases in the percieved value of homes has provided many families with an ATM line of credit (home re-fi's) which has enabled them to artificially increase their standard of living. With plummeting home values so goes the ATM machine.

Consumers are responsible for fully 70% of our economy. By simply connecting the dots it is no feat of magic to predict what is arriving soon to a neighborhood near you. Many laid off workers, (mortgage bankers, real estate agents,appraisers,etc.) with the inability to tap into their unside-down mortgages. Ouch.

How will the real etate bubble bursting cause Gold and Silver to once again find their place in the world of currencies as the ultimate currencies they are? With the impact on the US Dollar as a result of a contracting economy, coupled with full blown derivative defaults in the mortgage securities market while at the same time the bankers responsible for this mess tightening lending standards. Simple. Investors will become very wary and begin the process of selling dollars globally thereby causing the value of the dollar to decline.

My brother just recently returned from a trip to China and Japan. Over dinner in Tokyo he was quizzed rather thouroughly by a high ranking major manufacturing executive about the state of the American economy. The mere fact that it was a topic speaks volumes.

In China, for every American unwilling to do a job, there are a thousand Chinese standing in line to do the work. For much less per hour. As long as Americans can spend, things will keep merrily rolling along.....until they can't any longer.

Be prepared. Have hard assets in your possesion. An ounce of prevention.....

Look for higher values for both Gold and Silver for the balance of the year.