Housing/Gold Ratio As A Valuation Indicator

By Daniel Amerman – Re-Blogged From http://www.Gold-Eagle.com

The Housing/Gold ratio is a quite useful measure for evaluating relative values between real estate and gold, and also has an interesting historical track record for identifying turning points in long-term gold price trends.  In light of the commodities rout occurring in the summer of 2015, and the continuing strength in housing – it is worthwhile revisiting this basic measure, because the results aren’t at all what most people likely think they are.

The graph below shows the Housing/Gold ratio for the modern era in the United States, from when gold investment was legalized on December 31, 1974 through November of 2011.  When analyzed at that time (link here), the ratio clearly showed an historic outlier was being reached in terms of gold being expensive relative to real estate.

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