Economists' Outlook

Housing stats and analysis from NAR's research experts.

Home Price versus Gold Price

One of the best investments over the past decade has been buying gold. In 2001, gold was selling for $270 per troy ounce. Today, it is at around $1,600. There could be several reasons for the increased demand for gold:

  • Rising wealth in emerging economies (Russia, China, India, Brazil, for example) and the desire for conspicuous consumption.
  • China’s desire to buy commodities and something real rather than buy the shaky Euro-denominated financial paper assets or the U.S. dollar-denominated IOUs.
  • Safe haven in light of economic uncertainties.
  • Inflation hedge in light of massive printing of money in many countries.

Irrespective of the reason, one ratio worth a careful look is the median price of existing homes versus the price of gold, since people have historically also looked to tangible real estate as a hedge against inflation. This ratio is at one of the lowest points in modern U.S. history. To get us back to the 35-year average of 299, will the home prices finally recover or will the gold price tumble in the upcoming years?

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