Real Estate to Gold Ratio

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Interpretation

The real estate to gold ratio measures the amount of gold it takes to buy a single family home. The Shiller Case Homes Price Index seeks to measure the price of all existing single-family housing stock. Based on the pioneering research of Robert J. Shiller and Karl E. Case the index is generally considered the leading measure of U.S. residential real estate prices. The ratio has an interesting historical track record for identifying turning points in long-term gold price trends. When exatly is one of the assets "cheap" and what is "expensive"? Answering that question is where the Gold/Housing ratio is quite useful. As there is no dollar component in the ratio itself, inflation concerns drop out, and we are left with the value of two of the most popular tangible investments relative to each other.

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