The Flinchum File

Thoughtful Economic Analysis and Existential Opinions
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How Low Can It Go?

We know gold has become expensive and that houses have become relatively inexpensive.  If you measure the average cost of a house divided by the price of gold per ounce, you get the cost of the house in ounces of gold, instead of dollars.  Now, take a look at this chart.


Does this suggest houses are under-priced, or that gold is over-priced?  If you tried to arbitrage assets, you would sell gold and buy houses.
I think the relationship is more interesting than meaningful.  Gold is primarily a measure of fear.  I don’t think houses have anything to do with fear.  However, it may predict an inflection point in the economy, and I will study that more.