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The bullion to housing price ratio is a method that can be used for the purpose of determining whether average home prices have historically been cheap, overpriced, or appropriately priced. Gold is considered to be a decent reference point as it is classified as one of the most steady and long-lasting 'currencies' around. Fiat currencies, by comparison, depreciate and devalue over time.
Housing, unlike gold and silver, is a distinct asset that trades independently of precious metals. During a financial crisis, gold tends to do well, whereas real estate values usually tend to fall. While the gold-silver ratio can signal a good time to buy either metal, it's impossible to draw any concrete conclusions from their relationship about the market as a whole. It is worth noting that a fall in gold prices is improbable in the coming years due to the high degree of global volatility. By comparison, real estate prices have been relatively stable in recent years. Amidst high and growing real estate demand, there is no reason to expect a significant increase in house prices. The growing popularity of gold is more likely to indicate that the ratio average will move in the same direction.
However, according to the Home Price Index in America, housing price inflation has recently reached its highest level since December 2005. There has been a similar trend in the United Kingdom and Europe. The majority of the population in the UK and parts of Europe have become accustomed to working from home, and there has been an increase in relocation to larger homes away from large cities to more affordable areas. Furthermore, gold gained 7.36 percent last month, reaching a recent all-time level. Its believed that the current gold price strength is largely due to the US central bank's current policies. They have stated that they plan to defer interest rate increases till the US market hits economic growth and full employment. Inflation will be set to a rate that is predictable and sustainable.
If we analyze official US government statistics, then it is speculation by hedge funds as well as other investors that has propelled bullion future prospects to their highest level. When considering the present tremendous volatility around the new hot topic, cryptocurrencies, it's easy to see why the short-term outlook for physical and digital assets is optimistic.