Hello Jim,
I own, with others, a mini storage (378 units) and RV-boat/etc parking (109 spaces) facility. It is fully secured with key pad entry, exit and electric fencing around parking lot. Full time resident managers oversee the facility. This is the only facility of this type in the area. The managers are currently on vacation, and I am filling in yesterday and today. It is located in Rifle, CO, the heart of oil, gas, and oil shale in Western Colorado. The summer of 2009 we were still fully occupied. Today we are at 57% occupancy and hoping to maintain this level. We have reduced rates and are doing additional discounting on specials. We are still profitable as our debt to equity is 20%. I have hedged by buying bullion coins rather than distributing all the profits to members of the LLC. Property taxes are not being reduced enough to matter. When interest rates turn any business that is carrying much debt will not continue to operate.
Now to the real deal. Yesterday I processed 8 transactions. 3 short payments, 2 downsized units, 2 full payments, 1 new rental 7.5′X10′ (guy moving from house to apartment because roommate lost job). I received 2 phone calls from tenants who had never been late before stating they could not pay until July 1. Today no traffic. We are also a U-Haul dealer. Most traffic is outbound, people moving to live with relatives or hoping to find a job in a more populated area. I also own 8 2 bedroom apartments free and clear. 2 are vacant (1 recent eviction and 1 being repaired) I have reduced rental rates from $850 to $550 with most paying weekly instead of monthly.
The only construction recently in the area (with the exception of some oil and gas field work) has been government mostly using outside the area contractors. A $35 million rework of Garfield County Airport, 2 library buildings, 2 social service buildings, and 2 fancy fire department buildings $10 million. The town of Rifle has pumped about $1.5 million into refurbishing an old theater and $1 million into infrastructure for a deal to build a 6-8 plex movie project. Not much of this money went into local hands.
The town of New Castle reportedly just adopted the new UN sponsored building codes requiring all buildings to be sprinklered and use approved green builders and green materials. This is in an absolutely dead market where the local golf course just declared bankruptcy.
Everything local government is doing is purely suicidal. The FAT LADY hasn’t even started to practice. The fear factor among the populace rises daily.
Thanks again for all you have done to protect so many people. You are truly one of God’s servants.
Very Respectfully,
CIGA Slappey
Garfield County, CO
Jim,
Some interesting points in the lead article:
"You can see from the chart that today’s level is 46 percent above the historical norm at 7.6 units to one ounce of gold. By this measure, one can purchase shares of gold mining companies at their second-cheapest level in nearly 30 years. The extreme was in 2008 during the depths of the financial crisis; many share values quadrupled off of those levels."
CIGA Marc
Will Gold Equity Investors Strike Gold?
By Frank Holmes
CEO and Chief Investment Officer
U.S. Global Investors
Gold prices passed the $1,500 per ounce mark for the first time ever in mid-April of this year and have set up shop around $1,525-$1,550 an ounce aside from a couple of short pullbacks in early May. So far in 2011, it’s been relatively status quo for those investors who’ve embraced gold as a way to protect themselves from currency debasement, excessive money printing and inflation as prices have increased 7.67 percent. BofA-Merrill Lynch (BofA-ML) analysts are forecasting gold prices could fall to $1,400 an ounce during seasonal weakness in July before rebounding as high as $1,650 an ounce by early fall.
While the party continues for gold bullion prices, stocks of gold companies have been a no-show. The NYSE Arca Gold Bugs Index (HUI) has fallen more than 13 percent year-to-date and the Philadelphia Gold & Silver Index (XAU) has toppled more than 16 percent. Companies such as High River Gold Mines, Jaguar Mining and NovaGold Resources are off more than 45 percent from 2007-2008 highs.
This underperformance has been exacerbated in recent weeks making it a hot topic of discussion among investors, analysts and portfolio managers. This chart shows gold equities of all market capitalization sizes were holding up quite well until late April. That’s when global sentiment toward equities, not just gold shares, began to waver and prices dropped off a cliff.
For the purposes of this chart, CIBC qualifies seniors as companies with market capitalizations above $10 billion, intermediates as those between $10 billion and $2 billion, and juniors as those below $2 billion. Non-producing companies are excluded.
