Best of the Week
Most Popular
1. TESLA! Cathy Wood ARK Funds Bubble BURSTS! - 12th May 21
2.Stock Market Entering Early Summer Correction Trend Forecast - 10th May 21
3.GOLD GDX, HUI Stocks - Will Paradise Turn into a Dystopia? - 11th May 21
4.Crypto Bubble Bursts! Nicehash Suspends Coinbase Withdrawals, Bitcoin, Ethereum Bear Market Begins - 16th May 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.Cathy Wood Ark Invest Funds Bubble BURSTS! ARKK, ARKG, Tesla Entering Severe Bear Market - 13th May 21
7.Stock Market - Should You Be In Cash Right Now? - 17th May 21
8.Gold to Benefit from Mounting US Debt Pile - 14th May 21
9.Coronavius Covid-19 in Italy in August 2019! - 13th May 21
10.How to Invest in HIGH RISK Tech Stocks for 2021 and Beyond - Part 2 of 2 - 18th May 21
Last 7 days
Reverse REPO Market Brewing Financial Crisis Black Swan Danger - 29th Jul 21
Next Time You See "4 Times as Many Stock Market Bulls as There Are Bears," Remember This - 29th Jul 21
USDX: More Sideways Trading Ahead? - 29th Jul 21
WEALTH INEQUALITY WASN'T BY HAPPENSTANCE! - 29th Jul 21
Waiting On Silver - 29th Jul 21
Showdown: Paper vs. Physical Markets - 29th Jul 21
New set of Priorities needed for Unstoppable Global Warming - 29th Jul 21
The US Dollar is the Driver of the Gold & Silver Sectors - 28th Jul 21
Fed: Murderer of Markets and the Middle Class - 28th Jul 21
Gold And Silver – Which Will Have An Explosive Price Rally And Which Will Have A Sustained One? - 28th Jul 21
I Guess The Stock Market Does Not Fear Covid - So Should You? - 28th Jul 21
Eight Do’s and Don’ts For Options Traders - 28th Jul 21
Chasing Value in Unloved by Markets Small Cap Biotech Stocks for the Long-run - 27th Jul 21
Inflation Pressures Persist Despite Biden Propaganda - 27th Jul 21
Gold Investors Wavering - 27th Jul 21
Bogdance - How Binance Scams Futures Traders With Fake Bitcoin Prices to Run Limits and Margin Calls - 27th Jul 21
SPX Going for the Major Stock Market Top? - 27th Jul 21
What Is HND and How It Will Help Your Career Growth? - 27th Jul 21
5 Mobile Apps Day Traders Should Know About - 27th Jul 21
Global Stock Market Investing: Here's the Message of Consumer "Overconfidence" - 25th Jul 21
Gold’s Behavior in Various Parallel Inflation Universes - 25th Jul 21
Indian Delta Variant INFECTED! How infectious, Deadly, Do Vaccines Work? Avoid the PCR Test? - 25th Jul 21
Bitcoin Stock to Flow Model to Infinity and Beyond Price Forecasts - 25th Jul 21
Bitcoin Black Swan - GOOGLE! - 24th Jul 21
Stock Market Stalling Signs? Taking a Look Under the Hood of US Equities - 24th Jul 21
Biden’s Dangerous Inflation Denials - 24th Jul 21
How does CFD trading work - 24th Jul 21
Junior Gold Miners: New Yearly Lows! Will We See a Further Drop? - 23rd Jul 21
Best Forex Strategy for Consistent Profits - 23rd Jul 21
Popular Forex Brokers That You Might Want to Check Out - 22nd Jul 21
Bitcoin Black Swan - Will Crypto Currencies Get Banned? - 22nd Jul 21
Bitcoin Price Enters Stage #4 Excess Phase Peak Breakdown – Where To Next? - 22nd Jul 21
Powell Gave Congress Dovish Signs. Will It Help Gold Price? - 22nd Jul 21
What’s Next For Gold Is Always About The US Dollar - 22nd Jul 21
URGENT! ALL Windows 10 Users Must Do this NOW! Windows Image Backup Before it is Too Late! - 22nd Jul 21
Bitcoin Price CRASH, How to SELL BTC at $40k! Real Analysis vs Shill Coin Pumper's and Clueless Newbs - 21st Jul 21
Emotional Stock Traders React To Recent Market Rotation – Are You Ready For What’s Next? - 21st Jul 21
Killing Driveway Weeds FAST with a Pressure Washer - 8 months Later - Did it work?- Block Paving Weeds - 21st Jul 21
Post-Covid Stimulus Payouts & The US Fed Push Global Investors Deeper Into US Value Bubble - 21st Jul 21
What is Social Trading - 21st Jul 21
Would Transparency Help Crypto? - 21st Jul 21
AI Predicts US Tech Stocks Price Valuations Three Years Ahead (ASVF) - 20th Jul 21
Gold Asks: Has Inflation Already Peaked? - 20th Jul 21
FREE PASS to Analysis and Trend forecasts of 50+ Global Markets by Elliott Wave International - 20th Jul 21
Nissan to Create 1000s of jobs with electric vehicle investment in UK - 20th Jul 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Gold to House Prices Ratio May Plunge

Commodities / Gold and Silver 2011 Dec 05, 2011 - 07:14 AM GMT

By: Shelby_H_Moore

Commodities

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

http://www.coolpage.com

antithesis@coolpage.com

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


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

Shelby Moore ("author of this article")
01 Feb 12, 22:24
House prices to decline -75% or more

Sorry couldn't find the following articles on marketoracle, so will link the versions that appeared at another site.

I understand that Nadeem thinks inflation will lift all boats including houses, but the math below is fairly convincing. Perhaps the only factor I didn't include below is Asians coming in to provide additional demand.

http://www.financialsense.com/contributors/lance-roberts/2012/01/26/why-home-prices-have-much-further-to-fall

As gold returns as money, if we assume Mortgage payment as $ of DPI must decline to pre-1971 level of 7% (before dollar was detached from gold), then house prices must fall -50%.

If we assume the interest rises return to norm, then house prices must fall another -50%. So that makes a -75% price decline possible. Interest rates must eventually rise to finally arrest the rise in the gold price (as in 1980):

http://www.financialsense.com/contributors/bruce-krasting/2012/01/26/bernanke-goes-all-in

Tangentially, Fed targets the incredibly shrinking prices of personal products:

http://www.google.com/search?ix=heb&sourceid=chrome&ie=UTF-8&q=shrinking+size+of+grocery+products

To the extent that inflation raises the cost of materials (which is a small % of cost of home), it will be offset by declining wages and demand as UNemployment skyrockets.

Rising property taxes will further increase the (total) mortgage payments (costs) and thus decrease the amount of available (from the historic 7% of) DPI, thus further declines in house prices.

Thus I maintain the conclusion of the original title of my article on this page. See the link to the gold-to-house price charts in the article on this page.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in