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IMN Real Estate Conference and Cambridge House

by Trace Mayer, J.D. on January 28, 2009 · 13 comments

Reading time: 5 – 8 minutes

The past week has been extremely busy.  I attended IMN’s 6th Annual Real Estate Opportunity and Private Fund Conference in Laguna Beach.  Then I presented at the Cambridge House Investment Conference in Vancouver.  While real estate and natural resources may seem extremely different they are actually closely related.

IMN’s Real Estate Conference

The conference was exceptionally organized at a wonderful location in Southern California on the beach.  The general tenor of the conference was rationally gloomy despite the sunshine.  Scott Smith, Direct of Real Estate Investments for the New Mexico State Investment Council said to the full conference hall, “Let’s be honest.  You have closed no deals since July.  Please do not call me or leave a voicemail because I will not be checking them for six months.”

A common theme from these industry professionals was that this was the biggest event they had seen in their career, they did not know when it was going to end and not to catch a falling knife.  Steven Orbuch, President of Och-Ziff Real Estate which manages about $25B throughout the world in multiple countries said, “The depth and breadth is seen in every market and is still in the early stages.”

I had an interesting talk during a reception with a DLA Piper senior partner.  He was incensed at 24 year old Maserati driving idiots who could not get into law school but were able to sell credit-default swaps and other structured financial products which are now vaporizing firms and have destroyed this industry.  He had 30-35 deals lined up at the end of 2007 and completed only 5 in 2008.  I have a great story to tell about my chat with him but will leave it to the podcast.

A symptom of the underlying problem is that bid/ask spreads have been widening tremendously.  In many cases there are no bids.  Alvin Katz a partner with Mayer & Brown succinctly summed up the situation with “There is a full stop in deals.”  Perhaps the best advice came from Ambrose Fisher a managing director for Oaktree Capital Management, L.P. who said, “Batten down the hatches and try to survive to the other side.  It will be at least 2010-2011 before the fundamentals begin to improve.”  Marc Perrin a managing director with Starwood Capital Group Global, LLC said “I don’t disagree with anything Ambrose is saying.”

While predictable it is interesting to see the real estate market go into stasis.  I wonder if they read my 1 Feb 2008 article about the deflationary credit contraction.  “This is why stock markets have been crashing as investors flee into T-Bills.   Ultimately, investors ensconce themselves within a deflationary but invincible and immoveable golden forcefield.”  In other words, ‘batten down the hatches’.

Eventually I will move into and purchase a lot of real estate.  However, unlike these ‘professionals’ I have a reasonably good idea of when I think the market will bottom and when to begin purchasing.  The monetary metals are used to perform mental calculations of value or the pricing mechanism.

Currently, an average American home costs about $220,000, 18,333 ounces of silver or 248 ounces of gold.  I will begin looking for real estate deals, both commercial and residential, when an average American house is around 500-1,000 ounces of silver or 75-80 ounces of gold.  Until then I have battened down the hatches, there is no bid from me and because I own unencumbered gold I will survive to the other side and be liquid to buy.

CAMBRIDGE HOUSE INVESTMENT CONFERENCE

I was surprised with the traffic at the Cambridge House conference.  I think the final tally was around 7,000 with about 1,500 walk-ins that paid $25 at the door.  I suppose the $50/ounce rise on Friday is helpful for all the activity.

During my panel presentation I was interrupted twice with applause so that was encouraging.  I am sort of like a cross-eyed javelin thrower always keeping the crowd on their toes and never quite knowing how I will be received.  Thom Calandra even quoted me as saying, “Wall Street is a bunch of sociopaths. You can’t grow a conscience if you don’t have one.”  The DLP Piper attorney has legitimate cause for being enraged but as I tell on the podcast his client has even more cause!

My presentation was on the development and intensification of the deflationary credit contraction.  Several people found it extremely enlightening and useful.  As most people scamper off as soon as possible after the presentations I was surprised the Q&A lasted about 40 minutes. 

I think I need to develop a good foundational document of about 45-50 pages to provide a solid grounding in the principles at work.  While most of the information is available it is scattered and unorganized throughout about 100 posts which could be formidable for a new reader.  If you would find such a document valuable please leave your comments.

GATA has their 10 year anniversary this year.  In light of the happenings in the real estate market a paragraph from the 14 Jan 2008 GATA Wall Street Journal ad is particularly enlightening, “The objective of this manipulation is to conceal the mismanagement of the U.S. dollar so that it might retain its function as the world’s reserve currency.  But to suppress the price of gold is to disable the barometer of the international financial system so that all markets may be more easily manipulated.  This manipulation has been a primary cause of the catastrophic excesses in the markets that now threatens the whole world.”

As the gold cartel and complicit Wall Street sociopath’s actions continue failing the derivative illusion begins dissipating and holders of capital ensconce themselves in a golden forcefield.  Then more markets will move into stasis like the real estate market already has.  Remember, the system does not so much collapse as evaporate and the rate of evaporation is increasing.

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13 comments

ABOUT THE AUTHOR: Trace Mayer, J.D., author of The Great Credit Contraction holds a degree in Accounting, a law degree from California Western School of Law and studies the Austrian school of economics. He works as an entrepreneur, investor, journalist and monetary scientist. He is a strong advocate of the freedom of speech, a member of the Society of Professional Journalists and the San Diego County Bar Association. He has appeared on ABC, NBC, BNN, radio shows and presented at many investment conferences throughout the world. This is merely one article of 241 by .
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{ 8 comments… read them below or add one }

1 Dan Griffiths January 28, 2009 at 5:33 pm

Great post Trace! I also noticed Thom Calandra quoting your Vancouver presentation. Jim Willey quoted you as well (on backwardation) in one of his January articles.

I have a question. You indicate that you would look to purchase real estate when prices reach 500-1000 oz of silver or 75-80 oz of gold. With metals prices where they are today, it would be whole lot cheaper to buy 1,000 oz of silver than 80 oz of gold. Does this make silver a better investment at today’s prices (assuming of course that the price manipulation game ends)? What do you think?

Based on my limited involvement as a VERY small-time investor, it certainly seems that physical silver is much more difficult to come by than physical gold (visit your local coin shop and check their inventories of gold and silver eagles and you will get a sense of this), however, this does not seem to be affecting the spot price a whole lot.

2 Derrick January 28, 2009 at 6:40 pm

Trace,

I was able to make it out to the Cambridge House Investment Conference on Sunday (I had school on Monday so couldn’t then) and will say that your individual presentation was by far the highlight of the day. My friend and I really enjoyed how you kept the question and answer period going for so long. It was very interesting and was great to have the conversation develop as it did …much appreciated.

As for this, “I think I need to develop a good foundational document of about 45-50 pages to provide a solid grounding in the principles at work…If you would find such a document valuable please leave your comments”; I know I would love to be notified should you ever get around to doing something of the sort. I agree with you on the fact that finding out about the details on topics such as debt-based currency, money creation etc. is quite the process as it involves a great deal of site-surfing and picking up snippets of information here and there.

Thanks again for the awesome presentation at the conference.

3 Carl January 29, 2009 at 5:43 pm

Trace,

Great presentation at the Cambridge House Gold Show. You were one of the best speakers. Could you make that Summary Report available?

“I think I need to develop a good foundational document of about 45-50 pages to provide a solid grounding in the principles at work. While most of the information is available it is scattered and unorganized throughout about 100 posts which could be formidable for a new reader. If you would find such a document valuable please leave your comments.”

4 Adam January 29, 2009 at 10:42 pm

Would love to read a foundational document if you have the time/energy/desire to create one. Great work on this blog. Thank you!

5 James January 30, 2009 at 6:50 am

Hi Trace,
I really enjoyed your presentation at the Cambridge House Investment Conference. Thank you for staying around as long as you did for the Q&A period. It really helped me to cement the ideas. I thought your presentation was definitely the highlight of the conference.

The foundational document you speak of would be extremely useful and would be much appreciated.

Thank you,
James

6 Genewa S Livinai May 16, 2009 at 11:41 pm

The 15 pages book represent a one of a monetary bible. I think its a high time to come forward with ideas to spread what money is all about and importantly should have a solid foundation like any other “God creation”.

As human we have our Mother and Father, A fruit has its Tree, and many more. The fiat currency is driven dream of very few people.

Genewa S Livinai

7 Shirley Coffman September 14, 2009 at 4:36 am

I am in real estate. I sold off all my houses (12) from the 70′s/80′s as the market did not appreciate much in Las Vegas during those years. I bought a couple of houses just prior to the boom, then2 more, then 2 more in the boom. I had one from 1990. 7 total, with about $800,000 equity (pre tax). My mantra will always be ‘Ishould have sold at the top of the market.’ Two foreclosed, the others sold at a loss and the one from the 90′s I made money but spent it to live on. So, I bought 21 oz of gold at 950 & 1290 oz silver @ 15.50 in June. unallocated, at the Perth Mint. I have about $25,000 left. Should I buy more gold or more Silver or a mix or should I diversify into commodities. I am 63, still must work and plan to leave the US within a year or less. I have a son & daughter in their early 40′s – also fairly broke and 2 grandchildren. I can’t affford mistakes at this point. Silver looks the better buy. The broker with EuroCapital told me I should not buy more of either, but diversify. May I ask your input here. My daughter and I are going to enlist past investors and begin to find great bargains to buy on the courhouse steps and flip for our investors. I’ve been in LV for 45 yrs, she was born here. We hope to raise a little capital from this, she is already has one investor. We each have over 20 yrs of RE appraisal background as well as our RE sales background. Her investor is making 20K to 40 K / per flip. I hope to raise more money to invest, just met D Casey Group and am going to his Energy Summit in Denver this week. I live in some fear that Obama is itching to enact Marshall law and begin to treat us very badly with foreign troops here as homeland security. Sorry for the saga. I am buying your book today. Any water to throw on this fire?

8 Trace Mayer, J.D. September 14, 2009 at 11:35 am

Very thoughtful comment. Real estate plays a key role in preserving and growing my own capital. Understanding the current environment is particularly important so getting the book will be helpful because it takes you step by step through where we have come from, where we are and what is likely to happen over the coming decade(s).

I think diversification is good but I look at it a little more broadly and as you mention political risk is increasing. As far as advice I think you should focus on strengthening your ratios and I have provided some tools in Provident Living Principles. It is essential to know how to measure where you are. Everyone can change their ratio benchmarks, of course, and I am very risk averse, do not like mistakes and try not to lose capital so my ratio benchmarks may be different than others. Everyone has their own preferences though.

Political risk is hurting the FRN$ and currency controls are being increased.

I would be wary of any type of ‘paper gold’. You may want to review my page on How To Buy Gold Or Silver. I recommend the physical metal in your hand or if you use a third party I only trust GoldMoney (which Schiff also trusts and wrote about in CrashProof).

As far as water, well, as I wrote about in Silver Trending Towards Backwardation Again “While silver is currently not as cheap as it was earlier when I recommended buying; the ‘tears of the moon’ is still a decent value.” Likewise platinum is not nearly the value it was when I recommended it at $1118 a few weeks ago.

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