Marc's Mortgage Matter's

When investors are scared about inflation, or lack of inflation, political turmoil, increasing debt, etc., they buy gold, and the price goes up. And when things calm down, usually the demand decreases and the price goes down. Back in 1980 the price hit $850 per ounce - holy smokes - but that pales in comparison to gold now, which is sitting around $1,390 per ounce. In the "old days" you actually had to have cash to buy gold, or you could buy stock in gold mining companies as a proxy - but that added another layer of volatility and risk. Since 2004, however, one can buy gold through exchange-traded funds (ETF's). Historically gold has gone up 2% per year (versus 8% for stocks) although since 2001 the price of gold in US dollars has more than quadrupled. And historically investors have used gold as more of an insurance hedge than a way to become rich - but as speculators have piled into the market potential volatility has become more of an issue in the last few years. With speculators comes volatility. That being said, gold is the one currency that a central bank can't print - nor does its value depend on national politics. And many think that the world may be heading back to the gold standard.

You may need some gold after Christmas if you want to ski at Vail and Beaver Creek: they will charge $108 for a single-day, walk-up lift ticket during the week after Christmas, passing the much anticipated $100 mark for the first time in resort-industry history. That's a lot to start at 9, end at 3, and take an hour to eat a $9 bowl of Denison's chili at lunch.

A holiday-shortened trading week and a few signs that the economy isn't rocketing forward served to stop the six-week rise in mortgage rates, which has pushed key home loans rates to about five month highs.

Warmer economic growth has been largely to blame for the increase in rates during the fall, but this increase has been exacerbated to a degree by the Federal Reserve's stimulus program, some post-election improvement in moods and a tax compromise which lends some certainty (and a little boost) to the outlook as we roll into 2011. While the economy is moving forward at a measured clip, there are few signals that it is powering ahead so forcefully that interest rates should rise much further than they already have, and they may have even overshot the mark, which is typical.

Mortgage rates and housing markets matter somewhat less than do holidays this time of year. This week's a holiday-shortened one as well, with a fairly light calendar of economic data due out. The leveling of interest rates for this week should largely turn into a two-week affair by the time next week rolls around, and we expect little change if any in mortgage rates. 

At a recent computer expo (COMDEX), Bill Gates reportedly compared the computer industry with the auto industry and stated, "If GM had kept up with technology like the computer industry has, we would all be driving $25.00 cars that got 1,000 miles to the gallon."
In response to Bill's comments, General Motors issued a press release stating:

"If GM had developed technology like Microsoft, we would all be driving cars with the following characteristics:

1. For no reason whatsoever, your car would crash twice a day.
2. Every time they repainted the lines in the road, you would have to buy a new car.
3. Occasionally your car would die on the freeway for no reason. You would have to pull to the side of the road, close all of the windows, shut off the car, restart it, and reopen the windows before you could continue. For some reason you would simply accept this.
4. Occasionally, executing a maneuver such as a left turn would cause your car to shut down and refuse to restart, in which case you would have to reinstall the engine.
5. Macintosh would make a car that was powered by the sun, was reliable, five times as fast and twice as easy to drive - but would run on only five percent of the roads.
6. The oil, water temperature, and alternator warning lights would all be replaced by a single "This Car Has Performed an Illegal Operation" warning light.
7. The airbag system would ask "Are you sure?" before deploying.
8. Occasionally, for no reason whatsoever, your car would lock you out and refuse to let you in until you simultaneously lifted the door handle, turned the key and grabbed hold of the radio antenna.
9. Every time a new car was introduced car buyers would have to learn how to drive all over again because none of the controls would operate in the same manner as the old car.
10. You'd have to press the "Start" button to turn the engine off. "