Interesting brain teaser in the short view by John Authers (FT)
What if gold, close to $1,000 per ounce, is the only true global currency? If we believe that, then it says something interesting about the price of US houses – another asset that can claim to be a store of value.
In gold terms, US houses have never been as expensive as they were at the beginning of the 1970s when the median house cost more than 700oz gold, according to Tim Lee, of Pi Economics. But they nearly regained that peak in 2001. Their decline since then – even as their prices in dollar terms have gone through the roof – has been precipitous. A US house would now cost you only 220oz of gold. Over history, this price has tended to revert to an mean of about 350oz.
So, if disparate markets are put together, the US financial industry has lost more than half its value and US housing more than two-thirds of its value since 2001.
Either the US is on course for disaster or the moves on these markets are overdone.
Since we only deal in FIAT money and no currency is pegged to gold, gold is NOT a currency. At best gold is an asset class, like any other commodity (wheat, oil), or any other asset class (stock, bonds, options).
Therefore what the analogy is really saying is: gold is a bubble housing is depressed. if you compare the price of houses or financials to the price of a commodity that has run-up lately (say corn) then the houses look cheap, compared to a year ago.... a depressed asset is cheap compared to a bubbled asset. But since you are not holding your currency in gold, it is useless to make the comparison, unless, well... you own gold.
Therefore the alarmist conclusion doesn't hold in my view. Nonetheless a nice little brain teaser!