Daniel Amerman's interesting perspective on relative value of housing vis-a-vis Gold.
The red line measures the number of oz of gold to purchase an average US home. So if the ratio is high as in the case of 2001 peak, it means that property is overvalued relative to gold and when the red line is much lower it suggests that Gold has become overvalued relative to Property.
By that measure, Gold is not cheap relatively speaking and we're seeing the ratio declining further in recent years.
This perspective is not so much to indicate where Gold is heading, but is to show that relative against another asset class i.e property, its relative value has risen rather substantially. Whereas it took 450 oz of Gold to buy and average home in US at the turn of the century, now only require 1/3 of that or 150 oz to do so.
But yes, it does show indeed that Gold is a good store of wealth in the long term, at least since the turn of the century.
