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  • The Goldonomic site is for serious investors only. It is run by talented people with Master's Degrees and years of experience. The "wisenoses" and those who prefer to GAMBLE and/or seek immediate satisfaction (or dissatisfaction) must seek advice elsewhere.                                                                                                                                                                          F.S.

  • The majority is never right. Never, I tell you! That’s one of these lies in society that no free and intelligent man can ever help rebelling against. Who are the people that make up the biggest proportion of the population — the intelligent ones or the fools? I think we can agree it’s the fools, no matter where you go in this world, it’s the fools that form the overwhelming majority - Henrik Ibsen.

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  • The business of investing rationally becomes problematic when market participants are pursuing maximum nominal returns without a second thought as to the real (inflation-adjusted) value of those returns and the location of the savings.

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  • Comparing the currencies is like picking the prettiest horse in the glue factory. The history of all fiat currencies shows they all end up being valueless. Gold’s nobody else’s liability and it has no counterparty risk. It’s provided protection against destruction of wealth for centuries and we’re at the cusp of another major chapter in its illustrious history.

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Free Newsletter

31
July
2022

Gold-Silver & Real Estate

A house for 1,500 x 1 oz. American Silver Eagles!

Gold & Silver vs. Real Estate: Gold and Silver will soon make a home very affordable.

Gold and silver prices are higher than they were 18 months ago—but so are real estate prices. Partly due to a shift in geographical trends from the pandemic, but mostly a result of extremely low-interest rates. Mortgage rates in the US hit an all-time historic low in December, making it easier than ever to finance a home. So, do the ratios of gold and silver to real estate remain elevated? And where do they stand compared to the last big bull market in precious metals? It’s an important question because we’re convinced the monetary crisis ahead will push these ratios back to their all-time lows and hand those of us with a meaningful amount of bullion the opportunity to buy a house outright. If we’re right, buying a home someday from the proceeds of gold and silver sales could indeed be very affordable.

This ratio is derived by dividing the price of the average home in the US by the price of gold. We’ll start in 1975 when gold was legal to own again. The highs and lows are marked, along with the current ratio as of the end of February. You can see that the ratio started falling in 2018, but has ticked up again since mid-2020.

Goldreal estate ratio 2021 03 03

You can see that at gold’s peak in 2011, it only took 135 ounces to buy the average-priced home in the US. And it took just 85 ounces in 1980. We think this ratio will fall over the next few years. It’s even possible it could take even fewer ounces than it did in 1980… Unlike the 1970s, most major asset classes are in a bubble today, something history has rarely witnessed. The global financial system is also much more precarious, due to negative “real” rates, runaway currency creation, all-time highs in global debt, and deficit spending at levels never before seen in US history. Add it all up and it is hard to imagine a scenario where gold and silver don’t climb higher—and real estate values weaken. Also, note that house prices actually rose in the 1970s—but the ratio still fell since gold and silver were rising more.

Silver/Real Estate Ratio

We also have a chart of the historical relationship of silver and real estate since 1975, along with the highs, lows, and current ratio (through February). It takes 15,319 ounces of silver today to buy the average-priced home in the US. But it only took 5,521 ounces in 2011, and just 1,464 in 1980! These low readings are due to silver’s higher volatility. We think a repeat of just three mints cases of silver coins will buy a house again someday.

Just 1,500 ounces of silver could someday buy the average-priced U.S. home (before taxes). It’s probably one of the easiest ways for the average person to participate in a wealth transfer. That’s an amount even those with a modest budget can handle. As with gold, though, the ratio could drop even further in the type of crises we see ahead.

Silverreal estate ratio 2021 03 03

When the monetary crises begin to pick up steam, it will take fewer and fewer ounces to buy a house. Keep stacking so you can take full advantage of it!

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