The two pictures attached, are for two homes I have owned, one in Philadelphia, and the second is in Montrose Colorado. The first, recently sold for close to a million dollars. I paid $21,000 for it in 1971. Same house, huge, with a 35 foot library, lots of bedrooms, a wine cellar, two furnaces, etc. (Heating oil then, was 14 cents a gallon, probably a tenth of what it is now). The first, took a lot of oil to keep it warm, which goes to show you the devaluation of the dollar, in which 99% of Americans save, hoping they can enjoy a nice retirement. That was in 1971 that I paid $21,000 for a Philly home, and 55 years later it is a million dollar home. Same neighborhood, same city.
The second picture, is of a home in which we now live, and have for 35 years. Like the one in Philly, both were built in 1887, the current one in a small town, and half the size of the one in Philly. I Paid $150,000 for it in 1991, 20 years after the one in Philly. Realtors now want me to list it for a million, but it’s not for sale. Yesterday, my wife Bonnie, and her daughter were looking at houses for sale here, for her daughter, and they all were in the $400,000 – $500,000 range, for a house, half the size of ours, and newer of course, but probably without the character of either, in both places.
I paid market prices for both. Neither was a disaster sale. Is real estate an inflation hedge? Yes! If I sold our current one for a million, and bought another for a million, property taxes would be huge, as my property taxes stay the same as we have owned it so long. They’re both wonderful places in which to live, and everyone should own their own home, maintain it and enjoy it. A contractor client of mine, who builds homes, says that he couldn’t build my home for $2,000 a square foot. It cost $8,000 to build in 1887. See what has happened to the dollar?
If Bonnie’s daughter bought a $400,000 house today, at half the square footage of our current one, would it be an inflation hedge? I am certain it would, as the D.C. presses continue to roll, and a current edition of the Journal, says that Social Security is on the verge of bankruptcy, which shouldn’t concern us at all, as the presses will just print more money to pay for Trump’s Iran war, endless welfare, and various gobbledygook bills passed by Congress, virtually every day it seems.
The point of this screed is, BUY a home, but don’t SAVE in dollar priced items, like stocks, bonds, savings accounts, or treasury whatevers, and OWN, not RENT, your home. Rents will go up in dollars, as the dollar shrinks, and rental properties go up in dollars, so rents will also. Anything dominated in dollars, such as real estate, rents, gold and silver, will go up in dollar prices, while their values will remain the same.
“Their values will remain the same,” is an important point. Real estate prices will go up in dollars, but the home’s VALUE will remain the same, as will the VALUE of gold and silver. Three ounces of silver, will still buy a gallon of gas, and 80 ounces of gold, would have bought either of the homes, or a $400,000 one today. This is the reason to save in gold, silver, and real estate, NOT in dollar denominated items.
The physical things, such as your home, gold and silver prices will go up in dollars, while the dollar’s value goes down, as in inflation. Storing your savings in dollars, is similar to storing water in a leaky bucket, even though it may only leak a drop every hour or month. The bucket will eventually be empty, and paper money will eventually be worth zero, as has happened in all of known history.
We charge a 1% commission, which includes delivery, we want no Social Security numbers, and gold and silver are the only insurance against inflation, which benefits go up in dollars as the value of the dollar goes down, with no monthly payments, other than the more insurance you buy from us, the more secure you will be, as the ultimate end of un-backed paper money continues its journey into worthlessness.
I’m sure you’re tired of my writing about nickel Cokes and Hershey bars, which at my age I remember well. I just thought a real estate comparison might make It even clearer!
Don Stott don@coloradogold.com
