Rising of Gold/Silver vs Rising Value of Housing

[Zippyjuan]

Aside from the bubble, housing prices have pretty much tracked the over rate of price inflation. Gold does not always follow inflation. When Nixon closed the Gold Widow in 1972 officially ending any gold backing of the US dollar, the price of gold rose for the next eight years- its nominal price peaking in 1980 (in a bubble). After that, it moved generally down until about 2001 (20 years) and it has been basically rising since then. I say generally because it did move up and down in between but the overall trend was up, down, and then up again.

[down_south]

I am discussing the purchase of precious metals with my partner. He believes that the belief that the price of silver rising as the dollar is devalued is the same as the belief people had that housing would always rise because of inflation. Please help me explain to him how these are different.

The simplest difference is this....you can't build neighborhoods full of gold and silver simply because there is a booming demand; that is, there is a limited supply of gold and silver whereas, as we saw 6 years ago, we can build houses until everyone in America has one. Gold/silver are called God's money because you can't create more of them out of thin air, however so long as there are economic illiterates in DC, trees, there can be an indefinite increase in money and houses at any time (hmmm....given this logic, I would think environmentalists would join us in hating the Federal Reserve).

If this doesn't convince your partner, bring on the numbers. Look at the increase in gold and silver from the time Bush was elected till the time Obama was elected the first time, then from the time Obama was elected the first time till the time Obama was elected the second time.


SILVER/GOLD

1/20/2001 $4.75/$264.60
1/20/2009 $11.17/$838.23
11/6/2012 $30.96/$1,680.40


These things have gone up for over a decade. If that's still not enough, just buy a few silver coins and see what they do over the next year.

[FindLiberty]

...deleted - I posted wrong clip into wrong thread... sorry.

[The Free Hornet]

I am discussing the purchase of precious metals with my partner. He believes that the belief that the price of silver rising as the dollar is devalued is the same as the belief people had that housing would always rise because of inflation. Please help me explain to him how these are different.

Is your partner aware of car they might have wanted to buy in 1964 for, e.g., $4000? Do they think that car would be worth $120,000 today like an equivalent amount of silver?

The median house price in 1964 was $18,900. Saved in silver, that could be $567,000 yet the median house price is now under $175,000 (yet peaked over $275,000).

Of course houses and cars have both utility and costs. The downside to gold and silver is not having bought it soon enough (and the cost of physical security if you hold it - which arguably - you ought to be providing for anyway with your life, stuff, and loved ones and their stuff).