Monday, June 20, 2011


Gold, cash, money, silver, property.

There are various interpretations of the word value. There is the value of human relationships, family values, religious values and moral values, all of which, I’m informed, are gradually crumbling away.
Then there is the value of the freedom of speech, maybe this is a moral value, but it is a value that many people do not have, but with the coming of computers and the internet, mobile phones and digital cameras, this freedom is seriously impinging the power of the dictators. Mubarak, Egypt; Bashar, Syria; Gaddafi, Libya; Thein Sein, Burma; Mugabe, Zimbabwe; Salih, Yemen; and all the rest, and even in Italy the press is not completely free, and is mainly controlled by the premier “Bunga Bunga” Berlusconi.
This later value is fine for the philosophers, politicians and newscasters, but doesn’t relate to the value that is of the greatest worldwide interest, the value of money. Call it specie, fiat, bullion, stock, shares or bonds, this aspect of money has more daily column inches in the press than any of the other values combined, ergo greatest world-wide interest..
But, what is the real value of these flimsy and ephemeral articles on which we base our belief for our future, our children’s future, and that of generations as yet not considered. Bullion, generally regarded as the greatest hedge, and the safest investment, suddenly, in mid-May lost some 17% of its value. Safe? Whoops!
We are running out of fuels, sea levels are rising, food prices are becoming beyond the reach of the poor, and the big financial houses, when interest rates are so low, still have the power to charge 30% or more interest on debts incurred with credit cards. These same banks, which include Barclays, UBS, Citigroup and Bank of America, are all under serious investigation, for insider communications, by the various financial regulatory bodies. The Santander bank; remember the old Abbey National; is in such difficulties that in many parts of South America, if you apply for one of their credit cards you can obtain discounts on goods subsequently purchased, of up to 50%. This discount isn’t given by the shopkeeper, but it is a desperate attempt on behalf of the bank to keep bringing in cash and increasing their customer base.
The MBNA bank, and others, by skilful manipulation of the terms and conditions which none of us ever bother to read, now have a scheme in which your minimum monthly payment no longer covers the interest charged, which means you will pay forever if you can’t break the cycle.
So, apart from taking to the streets, attacking financial institutions, declaring bankruptcy or creating some form of mayhem, which doesn’t help the situation, but for a while is a great way to let off steam, what can one do? The poor, unhappily, can do nothing except gradually become overwhelmed by a mountain of debt and monthly repayments, which will probably follow them to the grave.
The value of British money verses the Euro; remember a few years ago when the Brits used to scoff at Euroland, and the Yanks would ask “ How much is that in real money”; has fallen by almost 50% in the past half dozen years. The US money is even worse off. Ah, you say, what about Greece and Portugal? What about them? Have you seen the figures for children living, or existing, below the poverty line? The once great, I use the diminutive, Britain, is amongst the worst of the European nations. Charity should begin at home.
The pound and the dollar are still falling, despite all the dire predictions about the break-up, or breakdown, of Europe and its monetary system. And, what is more, the buying power of the Euro ain’t what it used to be either, food, fuel and the general cost of living continue to rise.
So, lets take gold or silver, no, you take them, look at the 30 year track record and you’ll see what rotten investments they really are, yes, they’re at an all time high, when based on dollars, which are at an all time low. Imagine the paper profit you could have made if your gold was priced in Zimbabwean money. You’d be a squillionaire! But of course, as I mentioned, these commodities fell back by seventeen and a half percent in early May. Did you buy on the way up or sell on the way down?
Maybe you’d be better off backing a horse, or buying shares in Parmalat or Enron, or bonds from Bernie Madoff.
Seriously though, bricks and mortar are still really your best bet, but bricks and mortar, not plasterboard on pinewood frames stapled together and covered with tar-paper. But where to buy? Florida has ten years supply of houses waiting to be sold, in dollars, so prices will probably remain low for years to come. They also have tornados. Spain has more houses, with or without planning permission, or gas, or water, or electricity, or drainage, than they know what to do with. North Africa and the Middle East, including Turkey have language, law and culture so very different to Western Europe that it is not easy to communicate, or to understand, notwithstanding their revolutions.
So, we’re left with France and Italy. If you’re happy with the superior French attitude, then fine, but of course all the really desirable parts were snapped up years ago, long before “A Year in Provence” became so popular among the straw-hated, rugby-shirted, crimplene-clad English. Which leaves Italy. The north is either wet or sticky, Milan has more rain than Manchester. Calabria and the south are booming, Jerry and his builders are slapping up houses on every available plot, with, or in some cases, possibly without, the required and necessary documentation. Tuscany suffers from a glut of Brits, Germans and Americans, which is fine if you want to start your own small ghetto of like-minded nationals, but has suffered so much from the publicity attracted by “Under the Tuscan Sun”, that a riposte has been written by a local native Italian called “Under Too Much Tuscan Sun”.
So where then? Umbria, that’s where. Still for the most part old fashioned, low key, traditional and honest, with many of the values that some of you are looking for. Still undiscovered by the mass of tourists. The birthplace of Western art and responsible for the re-birth, the renaissance, of Western religion. Mass developments for tourists don’t exist, only pre-existing properties can be restored, no green-field sites are available for speculators and therefore the existing property values remain constant.
Most properties for sale in the countryside are owned by local farmers, who generally inherited them from their families twenty, thirty or more years ago, and if the price they want isn’t currently available, then they’ll wait until it is. After all they’ve waited half a lifetime so far, and another few years won’t make any difference. The prices therefore remain steady and the old equation of desirability / availability remains in force. As long as more people want an item than there are items available then the price / value remains. There are untold amounts of paper money in the world which the people in charge really do not want, so it falls in value, the reverse is true of property in the green heart of Italy. ”Showcased”, to use an unfortunate phrase in popular usage, on the site
And, if it all goes really wrong, at least you can shelter from the storm in a stone-built late medieval house, rather than wrapping yourself in paper money, or burning it to keep warm, or even using a gold brick for a pillow.

John Tunstill 2011