Engineer

Gold's Relationship with Real Estate

Here's another way of looking at it.

In the early 1970s, shortly after the US defaulted on its gold standard, you could buy an average home in the US for 200 to 300 oz of gold. However, during the subsequent crisis of confidence of 1979/80, the ratio dropped to around 100 oz per home, simply because the value of gold skyrocketed.

In 2001, the average US home in gold peaked at a valuation of around 700 to 800 oz. Since then it has declined steadily to around the 300 oz level. If we are to see a re-test of the 100 oz mark, either homes would have to decrease in value another 2/3 (!!), or gold would have to increase in value by three times, or some intermediate combination of the two.

I'm not sure if this 100 oz valuation will be retested anytime soon, but I do get the sense that Gresham's Law (good money goes into hiding when bad money appears, en.wikipedia.org/wiki/...) will act even stronger in the years to come until we can figure out some way of putting ridges on "paper money".