Larry and anyone else,
I feel a little silly asking this because on the one hand it seems obvious and on the other it seems risky and foolish. I got this idea listening to FSNH, the one with Rubino on the housing crash.
If someone had a lot of equity in their house and wanted to "lock in" the profit they've made over the last few years and wanted to bet that the deficit spending will lead to further devaluation of the dollar and a resumption of inflation, would it be wise to refinance a larger mortgage (not a short term line of credit)and with the proceeds buy precious metals?
I'm probably looking at the too simply and with a great deal of ignorance, but it seems to me that I'd rather borrow the "expensive" dollars now and pay back with the "worth less" dollars later.
I'd love to hear what anyone's thoughts are on this.
Howard

my house has appreciated over 100% since we bought it - i'd love to find a way to "lock in profits" too and am open to ideas.

as for me - i wouldn't bet precious metals against real estate. i'd want a solid income bearing instrument that would make my mortgage payments for me!

if i could re-fi for a larger loan at 5% and could invest the capital gain in something that GUARNTEE's a 9 or 10% return over the full 30 years (NOT a callable bond) i might be willing to take that risk.

i've looked into various things, junk bond funds, tax liens, investment property, high yielding stocks, etc. i've yet to find anything i'd be willing to bet my house on. but if someone knows of something that will work - i'm all ears!!

-ja

JA,
I thought about an interest bearing bond or even triple net commercial realestate with a publicly traded tenent. But I thought about a couple of scenarios:
1. Hyperinflation - The money we have becomes worth much less and the fixed rate of return becomes much less in buying power.
2. Depression - What business is safe? What sector is safe? Do I really trust what companies tell us about their financial health today?
3. System Collapse - Everyone wakes up one day and realizes that the govenment regulators that they've depended on don't understand the system of interest rate swaps and other derivatives that they are supposed to regulate. Companies start to bail from these instruments and the whole system goes into shut down. How do we come out of it? What rules will the government change to get us out of it? What will be safe after the government changes the rules? I have a little concern about gold here too given the rules changes after 1929 and the confiscation.
Howard

Sell it

I just refinanced my house and cashed out all of the equity (above 20%) and am using it to follow the COT. I read an article last summer about doing this. Basically it says you should be able to easily make over 6% (the mortgage rate) on other investments.

But the best point that I thought the article made is what would possibly happen if you lost your job. At that point you are probably not eligible for a home equity loan. You may possibly have to move because you can't make house payments. On the other hand, if you already have your home equity cashed out then you can use it, if needed, to make you house payments.

Dave

Financial Sense has an article in the precious metals archives somewhere that was writtem a year or two ago. It compared the San Diego housing market with the price of gold over a long period of time. It included a lot of charts and research. The main point was that you should be able to sell residiential housing and buy gold. And if the historical relationships hold true, you should be able to cash in your gold a few years from now and buy all the real estate you want. It was very interesting. I'll try to find it later and post a link.

Larry

I understand that in california, the lender's only recourse is take repossesion of the property[ not against any of your other assests]. In this event borrow out maximum one can at current "low" interest rate..
if rate rise one will have locked in cheap money. in event the property prices collapse one may be able to buy same property or similar at much cheaper price later[ deflationary scenario]
If gold and oil were to do well, would this be basis for stronger canadian dollar or real estate.
Is their any merit Here..?

Atul