As frightened American investors keep searching for any kind of silver lining that would suggest the U.S. economy isn’t continuing to fall apart, many of them keep seeing positive signs in a seeming reversal of the housing bubble that helped create the mess in the first place. You’ve seen all the stories in the mainstream media: Each incremental improvement in new-home starts, the pace of existing home sales, or some other measure of housing vigor and activity is milked for every positive vibe they can possibly find in it. And even as nearly every other fundamental indicator in the economy continues to turn against us – consumer spending, the value of the dollar, unemployment and discouraged workers, the federal debt and deficit – housing somehow is seen as able to float above this witches’ brew of other dismal factors. Of course, it’s all an illusion, a slight and momentary bubble that will dissipate – harming many thousands of investors – just as every other glimmer of true economic recovery has over the last few years. Harry Dent, one of our favorite economic commentators, explains why this illusion persists in a recent column. “Most of the home sales the ‘experts’ have latched all of their foolish hopes on are from institutional investors, hedge funds or private investors looking to cash in on low home prices by buying to flip or rent them out for positive cash flow,” Dent writes. “This does not a recovery make.” What evidence does Dent present to make the case that the “silver lining” of the housing “recovery” really doesn’t glitter at all? For one thing, he says, because the investment community is dominating home sales these days as they artificially nudge prices higher and availability lower, only 30 percent of home sales are coming from the first-time buyers who traditionally made for such a solid base in the U.S. housing industry as they embarked on their rise up to the American middle class. Another thing to note, Dent says, is that the rebound in home prices that everyone is talking about is “pathetically minor” compared with prices before the great crash of several years ago. It’s “not the stuff recoveries are made of.” Yet a third reason to ignore the optimists about housing: Nearly 25 percent of home mortgages are still underwater despite the so-called rebound. “We’ve gone from 30 percent at worst to near 25 percent,” Dent said. “That’s no progress to be proud of.” Here’s yet another reason for caution: It appears that the Obama administration is now attempting to get U.S. bank so lighten up their lending requirements again so that non-qualified home buyers can get mortgages. Does that sound familiar? It’s another version of the easy-money philosophy that led to the housing crash the first time around. So, it turns out that the “housing rebound” is no more reliable than any other sort of traditional investment in secular financial instruments, such as stocks and bonds – no more dependable, in the long and even the short term, than the U.S. dollar in which housing sales are denominated. The only real “safe” investments are God’s Money – gold and silver instruments that retain their value even as the fiat-money system crumbles around us.

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