Wednesday, July 20, 2011

What would you do with a million if you won the lottery?

So, they asked, “
What indeed? Keep it under the bed? In a tin box in the garden shed? In pounds, dollars or euro? Buy gold? Silver? Rare earths? Invest in shares?

It really is a bit of a problem.

Gold is now higher than it ever was, when priced in dollars, but, as the dollar has lost some 50% of its buying power in the last 5 years, where does that leave the true value of gold. Look back over the last 20 years, to the last price spike and you will see that the return on investment over that period is only some 3.5%. Big deal! Silver seems a better bet, but the price is controlled by a very efficient cartel, a silver Mafia, so what chance do you stand? Rare earths, what do you know about them, can you buy it by the bagful, or do you need to invest in shares through a broker? Perhaps Bernie Madoff could advise you, or Goldman Sachs who are currently under investigation by the Securities Exchange Commission for all sorts of shenanigans. And what about all those tungsten bars that may well be in the middle of the world’s gold reserves.

Dollars values are falling almost as quickly as they can print them, with the Asians getting rid of suitcases-full in European property purchases, See Richard Ellis’ and Savilles’ reports. Pounds too are falling fast and are now approaching parity with the Euro. The Euro, even with the Greek, Italian, Portuguese, Irish and Spanish problems remains strong, and the prospects of more Mediterranean countries joining the EEC shortly will only increase the market for home grown goods. The really fantastic news that Russia and Europe will take down border controls and abolish visas within the next five years will add several tens of millions of prospective consumers to Europe. But, yes, money ain’t what it used to be. And in five years time the value of a Euro will be less than it is today, and that’s called inflation.

The Americans and British are spending squillions on wars in foreign countries, and are killing lots of people, when their own poor are poorer, when their hospitals and schools need more funding and their politicians become more and more inept, corrupt and self seeking.

Throughout modern history, since the Industrial Revolution, money has been generated by the land owners, who branched into property, then manufacturing, and later, retail trading. High Street retail is being hit by on-line buying, and manufacturing undercut by the Asians, but property still seems to be king. Again, see Ellis’ and Savilles’ reports of Asian investment in prime city centre commercial properties. Rents can be adjusted to allow for the depreciations of inflation, fiat, or paper promises, but dollars, pounds and euro cannot be re-valued, upgraded or inflated.

So, OK, a million is what you asked about investing, so city centre prime commercial properties are not for you, so what then? USA…………mmmmm, no! UK………..mmmm, no! Europe…….mmmm, mebbee. But which part? Spain and Portugal, sure if you want wall to wall drunken holidaymakers, but then for that you could go to Cancun, or many of the Mediterranean islands. In France and Germany, the climate isn’t too good, and in newly joined EEC countries, the language, the law, the culture, mmmmm? So really it comes down to Italy.

The area south of Roma is too difficult to cope with, n’Draga, Camorra and Mafia do exist, they are not just on the films or in Chicago. The sea-sides are every bit as crowded as anywhere else with Germans, Brits, Dutch, Scandinavians, Russians and Ukranians slowly cooking with a thin layer of basting. The north of Italy is surprisingly wet with the average rainfall in Milan being slightly higher than Manchester. Which leaves the middle, the old Holy Roman Empire, Lazio, which is full of Romans, Tuscany which is full of Brits; so much so that it is often referred to as Chiantieshire; and the Marche, full of mountains, ravines and sea-side strips which are rapidly being over developed, like Spain and Portugal. Which really only leaves Umbria, which with hills or mountains on all sides, no seaboard, no navigable rivers, no real railways, and, until recently no highways, motorways or airports. Undiscovered by the masses, and still full of traditional charm and courtesy, with its own culture of respect, hospitality and cuisine. The birthplace of western art, and Giotto, Rafaello, Michaelangelo, Luca Signorelli, Piero della Francesca all lived, worked and painted in Umbria. And if it wasn’t for that little scrap of a man, Saint Francis, the Christian religion, with the cruel, vindictive, overpowering and corrupt church fathers, would have gone down the tubes long ago.

Why Italy generally, well all musical terms, many musical instruments and a huge amount of composers came from this country, Marco Polo and Columbus, started here, the word opera, which means work, is adopted world wide. Design, food and motor cars all helped to create Italy as a cultural centre.

In Umbria, and our Upper Tiber Valley, no new building permits in the countryside are issued, have been issued in the last twenty five years and won’t be issued in the future, If one has an existing building, a plot, or a ruin, one can rebuild, and enlarge if required and as they ain’t making any more medieval ruins, and lots of people would like one, the pressure is on the existing stock, and rarity multiplied by desirability is what causes prices to increase.

Or you could put your money into stocks, shares or bonds………..or back a horse……or, a couple of weeks ago, invested in Murdoch.

But better still, invest in Umbria.

See also the April blog on www.propertiesumbria.com

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