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toothfairy
@
2012 Mar 3, 1:35pm
toothfairy
@
2012 Mar 3, 1:35pm
If my math is right if gold prices hold at current level this means house prices will need to triple to get bck to the historic ratio.
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http://www.financialsense.com/contributors/daniel-amerman/2011/11/18/gold-housing-ratio-falls-to-historic-low
This must mean something to the gold bugs doesnt it?
As shown at "Point A", on an average annual basis, there was a previous modern ratio low of 99 ounces of gold to buy a house when gold reached its financial crisis peak valuation in 1980. Real estate was remarkably cheap relative to gold - and real estate investment would outperform gold by a huge margin over the 21 years to come.
"Point B" occurred in 2001, with the Gold / Housing ratio reaching a high of 543 ounces of gold being needed to buy a single family home. Gold was remarkably cheap relative to real estate - and gold asset prices would outperform real estate asset prices by a huge margin over the 10 years to come.
The current price of gold (as of November 15, 2011) is reflected in "Point C", which shows a Gold / Housing ratio of 96 ounces of gold being needed to buy the average single family home. This is only 18% of the 543 ounces required in 2001. Real estate is once again remarkably cheap, when compared to gold.
#housing