Wednesday, 20 July 2011

Gold still not unduly expensive shock

I've just been doing a few fag-packet calcs with the aid of the Treasury's GDP deflator. Gold was £241 / oz in 1995; if this had risen in line with GDP growth it would now be £351 / oz, whereas it's actually at £998 - 2.84 x the 'constant value' price. 

But when I use the price I paid for my house in 1995 compared to market worth today, it comes out at 3.12 x the 'constant value' price - still ahead of gold. 

And that's a bit of a surprise. Ideas anyone?


Elby the Beserk said...

We're all fucked?

tomsmith said...

Your house would surely be worth less today if the government had not intervened to keep it expensive

formertory said...

Your figures show only that insanity still rules in house prices and that what's needed is an immediate, substantial and long-term drop. Taxing land properly would be a great start, and burning planning rules wholesale, a good follow-up.

Blue Eyes said...

The quantity of gold available for buying and selling has increased massively in the last few decades. That is one reason why people who demand that we should use it as a currency are stupid. said...

commodity prices are subject to the laws of supply and demand; and I wont insult anyone's intelligence by explaining how that works!!!

Gold is a relatively finite commodity but like any other we are becoming more technologically adept at exploiting the resources (commodities) we have on this planet.

you cannot really compare property with gold by any measure they are diverse and uncorrelated but I will state this;

the majority of property's have for too long been considered investment assets when in fact they should be viewed as 'homes' (would the leveraging on them have been as high if they had been considered homes?) and the one factor to consider with any property whether being viewed as an investment or a 'home' is the old adage 'location location location'

this will along with supply and demand determine it's intrinsic value

Gold has always been and will continue to be the traditional store of 'wealth' as far back as recorded history goes, primarily because of its relative scarcity.

and as for currency linked to gold what would be wrong with that? the fiat currecny we have in circulation today is in danger of collapse and when the confidence goes in it the paper in your pocket will be worthless except to burn to keep warm in the ever fiercer winters we are experiencing.

no doubt due to global warming!!! NOT!

currency linked to gold or even silver like the commodity holds it value, it does not inflate its value away and has real buying power due to the fact it is underwriten by something of intrinsic growing value.

Abraham Lincoln issued the greenabck during the American Civil war to the tune of $400 million to finance the war.

this curency was not borrowed from the forerunner of the Federal Reserve but issued and underwritten by partly gold and the actual GDP of the Northern States economies. it was hugely successful and Lincoln repaid the central banks borrowing (built by the previous administration) within 1 year, financed the war, controlled inflation and the United States emerged after the war in the healthiest fiscal state it has ever known.

Lincoln I believe was assinated because the central bankers realised the threat he was to the emerging NWO.

I will leave you with this thought: if central banks can created and control the money supply from thin air via 'fractional reserve banking' what stops a determined clued up Government issuing money and controlling its own money supply based on actual asset reserves and the GDP of its economy?

Anonymous said...

I suspect that your house price is due for a correction rather than gold.

Liberista said...

GDP and CPI are fantasy numbers, heavily manipulated by government. the way i see it is this: id use gold as benchmark for the value of the things. as average, you would have been better off buying gold instead of a house, but people believe otherwise. reality is, house prices are inflated, and there is no real reason why house prices should as average go up, because there is no scarcity. on the contrary.
so id justs top looking at GDP or price indexes. they are both bogus. expecially the GPD.

Woodsy42 said...

For most people the important house price is not its simple asking price, which is largely irrelevent, but the purchase cost/affordability.
That actual cost is a combination of price plus mortgage interest, so high prices and low interest is no different from low price with high interest.
Gold is an excellent investment but people also want somewhere to live and sadly gold doesn't provide that, so you have to pay rent as well as buy the gold.

Ed P said...

Are you sitting on a goldmine?

English Pensioner said...

Was it Mark Twain who said "Buy land, they're not making it any more"!
But there's still plenty of gold available, and as the price rises, the more marginal sources become profitable, but at the same time damp down the price rise by increasing supply.

Anonymous said...

wouldn't the price of gold depend not only on the amount available but on the number of people who want it. And this goes up every year surely.Procreation being what it is.