Gold to House Prices Ratio May Plunge
Commodities / Gold and Silver 2011 Dec 05, 2011 - 07:14 AM GMTBy: Shelby_H_Moore
Increased volatility of the ratio is possible, due to financialization.
Understanding PHYSICAL gold at this juncture is critical to preserving your networth.
See the gold to DJIA and house ratios charts.
(the charts prove we have deflation relative to gold, but that is inflation to everyone who doesn't use gold as their unit-of-account)
Historically gold will peak at a ratio near 1oz to DJIA, thus we still have about 8 - 10x relative gain in gold before it peaks. I titled this essay with "plunge" because I am measuring in physical ounces, not the fiat price of gold.
Although it appears from the above linked chart, that gold is within 67% of its relative peak to a median house price, please look at the chart going back to the 1800s. I have a theory. See how the volatility in gold-to-house ratio was much less volatile and much less volatile than the gold-to-DJIA, back when houses were not part of "financialization". See how the 1980 volatility in the gold-to-house ratio was much greater and got closer to the extreme in the gold-to-DJIA. Remember the level of the USA 1980s S&L bailouts? That was roughly a few $100 billion (peanuts) compared to the current global real estate financialization, with a $quadrillion of derivatives of financialization.
Thus my theory is that the median price of a house will be devastated relative to gold going forward.
Gold is not a commodity.
(the technical reason is the physical has the lowest turnover velocity-to-inventory ratio of any monetary substance on earth, i.e. its marginal utility is nearly constant over the long-term)
The elite understand that ALL fiat systems end (every case in the history of world), and they hold their gold for decades waiting for it. We are now at that juncture.
Understand the oil = gold, strong dollar fiat system.
Unambiguous Wealth
Euro is the transition model to the NWO
Also, the authors above didn't think circa 2000 that silver would perform as an unambiguous store-of-value, but it did outperform gold, because it is a tiny market and doesn't need much monetary demand to drive it up, which is the same reason its fiat price is volatile.
My entropic universal theory is we have demographic bankruptcy in the developed nations.
Per Coase's theorem, the only solution to the demographic bankruptcy is remove the borders.
But it can't be coordinated without a world government, thus instead.
This author was prescient in 2007, again in Oct. 2010, and also called the top of the silver price above $20 in 2008 and to sell mining stocks.
By Shelby Henry Moore III
short bio, I have published articles on FinancialSense.com, Gold-Eagle.com, SilverStockReport.com, LewRockwell.com. I am the sole or contributing programmer of numerous (some million+ user) commercial software applications, such as Corel Painter, Cool Page, WordUp, Art-O-Matic, etc.. I have an education in engineering and math.
Disclaimer: My writings are my personal opinions, not to be construed as statements-of-fact. Do you own research. Licenses to think and communicate have never interested me too much, so I am not a licensed research, journalism, investment, legal, nor health professional. Please consult the proper authorities for all matters covered in my writings. I disclaim all liability for what you do after reading my writings. No one can predict the future, and if there is a physical world investment that never loses value, I haven't found it yet in my 44.1 years here on Niribu.
© 2011 Copyright Shelby Henry Moore III - All Rights Reserved
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