Gold Vs Real Estate

Let's be real. Gold is not worth more today than in 1970. Gold is not worth more today than 2000 years ago, says my grandpa. The dollar is just worth less. Today 1400 bucks for an ounce of gold would by you a nice new suite, pair of shoes, dinner, and 2 tickets to a play on broadway. Not even all that probably. 2000 years ago a Roman with an ounce of gold could have bought the same date night package. Does that Make Sense? 

Sure, you could have 34X (timesed) your money in Gold since 1970. But, How much cash does the average american have to invest like that? not a whole lot. Gold is a dollar for dollar investment. Real Estate on the other hand is leveraged by the bank! Your 0-Small downpayment gets leveraged by the bank and when you sell your home years later, you keep 100% of the profit. Let's do Simple Math again. 

  • let's say you could save 10% of your 10,000 income in 1970 for 5 years straight to invest $5,000 in gold. 5,000 bucks put into gold then at $39oz. You resell today at 1348oz for $172,820. ( Not Bad for the Rich to dump money in that) 
    • Now let's say you could save 10% of your $10,000 income in 1970 for 5 years straight to invest $5,000 (20% down payment) in buying your first home for $25,000.  You resell today at $263,800 and subtract out your 5,000 down payment and you netted $258,800. For my analytical friends: The cost of interest should be figured in. In 1970 interest rates were 12% on average. I don't know if they had 30 year terms then for sure but assuming they did then, the cost of 12% on 25,000 over 30 years= $67,575 bucks. now take your resell price of $263,800 subtract $5000 for downpayment, subtract $67,575 for interest and you net. $191.225.  Real Estate Wins Again! I'm not even counting if you ever rent it out so someone else pays off the mortgage for you. Real Estate Wins Big in that case. (sure there are cost of repair of 30 years too. blah blah blah my head hurts. 
  • Rates today are only 4% on mortgages so your net return over time on your actual downpayment money will be "HUGE" (the way Trump says it)  in the long run. Plus there are Zero Down Loans now.

 Annual Percentage Change Year Over Year for Gold and Real Estate. 

  • Since coming off the gold standard in 1971 Gold has been insanely volatile. 
  • When gold increases to a peak, Real Estate decreases. When Real Estate increases Gold Decreases. 

California Real Estate Vs. Gold

  • By Comparing California Real Estate to Gold we can more dramatically the patterns of gold and and real estate always doing the opposite of each other. ( Keep in mind it's showing percentage gains not prices) 

Salt Lake City Real Estate Vs. California Real Estate Vs Gold

Federal Reserve Rate Vs. Gold Vs. California Real Estate

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Devin HaubComment