Hereby I will prove how the realty boomers arguments are false.

What are the boomers arguments?

1.) Buy today, houses always increase in value in the long run.
WRONG. House prices cannot increase more than incomes in the long run. This is obvious if you think about it. If house prices go up more than people can afford to pay, buying stops, like it has stopped now.
Even Warren Buffett have pointed out that houses don't increase in intrinsic value. Unless there's a bubble or a crash, house prices simply reflect current salaries and interest rates. If a house is 100 years old, it's value in sheltering you is exactly the same as it was 100 years ago. Then came the maintenance as the house didn't renovate itself. It also has taxes, and insurance - costs that always increase and never go away. The price of the house went up about as much as salaries went up.
To put this is simple perspective, vegetable were costing Rs.5-6/kg when 5 digit salary was a rarity.
Today, the prices have gone up by about 4 times but so have the salaries. So, sounds very much like the reasoning people use now when they talk about how much their father's house appreciated "in the long run" without considering that salaries rose a proportional amount.

2.) Renting is just wastage of money.
WRONG. As said before renting is now much cheaper per month than owning. If you don't rent, you either:

* Have a mortgage, in which case you are throwing away money on interest, tax, insurance, maintenance, costs that increase forever.
* Own outright, in which case you are throwing away the extra income you could get by converting your house to cash, investing in bonds, and renting a similar place to live for much less money. This extra income is sufficient for emergency expenses,retirement etc.

Either way, owners lose much more money every month than renters and that's assuming prices don't correct to very high level & everything is smooth in the economy.

3.) As a renter, you won't have any money left as you will spend them on vacations,cars & hence won't have equity/savings etc.
WRONG. Equity is just money. Renters are actually in a better position to build equity/savings through investing in anything but housing. Renters can get rich much faster than owners, just by investing in conservative stocks & bonds.

* Owners are losing every month by paying much more for interest than they would pay for rent. The tax deduction does not come close to making owing competitive with renting.
* Owners must pay taxes simply to own a house. That is not true of stocks, bonds, or any other asset that can build equity/savings. Only houses are such a guaranteed drain on cash.
* Owners must insure a house, but not most other investments.
* Owners must pay to repair a house, but not a stock or a bond.
* Owners lose their money as house prices reduce. The EMI's remain constant in spite of reduction in rates. At the end of loan tenure, they would have paid almost twice than that of current renters who will buy at logical rates. Keep interest rates in mind. Most of the EMI is not principal amount but interest.

4.) There are great tax advantages to owning a house.
WRONG. Many people believe you can just reduce your income tax by the amount you pay in interest, but they are wrong. Buyers may not deduct interest from income tax; they deduct interest from taxable income. And even then, the tax advantage is not significant compared to the large monthly loss from owning.

If you don't own a house but want to live in one, your choice is to rent a house or rent money to buy a house. To rent money is to take out a loan. A mortgage is a money-rental agreement. House renters take no risk at all, but money-renting owners take on the huge risk of falling house prices, as well as all the costs of repairs, insurance, property taxes, etc.

5.) RE is based on local factors, it's not a national phenomenon. RE of Delhi-NCR,Bangalore & rest of the cities has nothing to do with Pune RE.
WRONG. Lending rates remain the same throughout the country. ALL loans are harder to get. This will drive prices down everywhere.

6.) A rental house provides good income. So, you can rent if you have purchased as investment.
WRONG. Rental houses provide very poor income in hyped areas and certainly cannot cover mortgage payments. Remember there is almost 300% difference between EMIs & rent for the same house.

It's pointless to do the work of being a landlord if you can make more money with no risk, no work, and no state income tax by investing in assured good returns bond.

7.) If owning is a loss in monthly cash flow, but appreciation will make up for it.
WRONG. Appreciation is negative. Prices are going down. It only adds to the injury of already high EMI's.

8.) As soon as prices drop a little, the number of buyers on the sidelines willing to jump back in increases.
WRONG. There are very few buyers left, and those who do want to buy will be limited by increasing difficulty of borrowing now that many house owners are near bankrupt as they don't save anything at the end of the month due to high EMI's.
No one has to buy, but there will be more and more people who have no choice but to sell as their payments rise. That will keep driving prices downward for a long time.

9.) House prices never fall atleast in Pune.
WRONG. If you see the RE scenario of 1996, prices crashed by 50% & took a whole 7+ years to recover.
Exact 1996 scenario may not be there today but strong correction is inevitable across the city.

10.) House prices don't fall to zero like stock prices, so it's safer to invest in real estate.
WRONG. House prices won't be zero, but the equity or the principal amount you paid can be zero or even negative. What you will pay as EMIs later in actual terms is not for the principal amount but only the interest as house prices dip. So, you will be only serving the bank.

11.) Prices will soften gradually, won't crash immediately.
WRONG. Prices are falling off a cliff. No one knows exactly what will happen, but it looks like prices will continue to fall for long time. These are just more manipulation of buyer emotions, to get them to buy even while prices are falling.

12.) The bubble prices were driven by supply and demand alone.
WRONG. Prices were driven by low interest rates and risky loans & good returns for investors in initial phases of boom in 2004-05.
Prices went up, interest rates went up & buyers savings went down. So prices are violating the most basic assumptions about supply and demand.

13.) There is lack of land.
WRONG. Ample of land is available & continue to be even in future in Pune. Sales volume are down. Even in Japan (small country with less land), prices went down. Current prices here are the same as that of 23 years ago. If we really had a housing shortage, there would not be so many vacant rentals.

14.) If you don't own, you'll live in a cheap neighborhood later.
WRONG. For the any given monthly payment, you can rent a much better house than you can buy. Renters live better, not worse. There are downsides to renting, such as being told to move at the end of your lease, or having your rent raised, but since there are thousands of vacant rentals, you can take your pick and be quite happy renting during the crash. There are similar but worse problems for owners anyway, such as being fired and losing your house, or having your interest rate and property taxes adjust upward. Remember, property taxes are forever.

15.) There's always someone predicting a real estate crash.
TRUE, yet irrelevant. There are very real crashes every decade or so. Even a broken clock is right twice a day.

16.) Local incomes justify the high prices.
WRONG. The mortgage should be more than your 3 years earning. It is much higher today. Most are already in danger/red zone.

17.) You have to live somewhere.
CORRECT. But that doesn't mean you should waste your life savings on a bad investment. You can live in a better house for much less money by renting during the down slide in RE.

18.) It's not a house, it's a home.
WRONG. Wherever one lives in it is home, be it apartment, condo, bungalow , mansion or house. Calling a house a "home" is a manipulation of your emotions for profit.

19.) If you don't buy now, you'll never get another chance.
WRONG. History proves otherwise.
Here's a beautiful quote from a analyst:-
"The real issue isn't whether you will be stuck being a renter all your life, she says. Its whether you'll get so scared about being shut out that you'll buy at the market's peak and be stuck in a property you can't afford or sell."

20.) It would take major economic recession or a major earthquake that wipes out this area in order for the price to fall by over 50%.
WRONG. Even today, if the prices fall by 50%, there will still be very few people who can buy at this levels due to uncertainty in jobs & most importantly high EMIs. Also, look at the rental rates for equivalent houses. Which loss per month is larger? EMI or rent?

contd....
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  • Non-availability of funds a concern for realty: experts

    "The real estate situation today is quite serious. The availability of funds is restricted. If this is the atmosphere, how can we expect people to invest in this sector. Another challenge is that the availability of debt has reduced. The RBI has restricted banks to give loans to the real estate sector," Piramal Group Chairman Ajay Piramal told reporters on the sidelines of a summit here today.

    Private equity lenders are also cautious while lending to the sector, he said.
    "The cost of private equity funds is high, which is another major concern for us. If they don’t get 30% return on their investments, they will not invest as they feel the risk is high. So the main problem is availability of funds," he said.

    Non-availability of funds a concern for realty: experts
    CommentQuote
  • RBI warns banks on real estate valuation frauds

    Alarmed by inflated valuations of real estate properties for the purpose of loans, the Reserve Bank of India (RBI) has asked all banks to submit an action-taken report on the issue.

    The matter was raised last week by RBI Governor D Subbarao during a meeting of the Board for Financial Supervision (BFS). After this, top RBI officials met representatives of the banking industry earlier this week. The regulator reminded bankers about the prudential norms on valuation of assets and asked them to follow these in both letter and spirit.

    Such frauds affect banks when they have to liquidate a property due to a loan default. During liquidation, it is often found that the value of the property is far less than what was mentioned when the loan was sanctioned. RBI has noticed frequent occurrence of such incidents.

    According to a note by Macquarie India, non-performing loans in the commercial real estate segment have increased from 1.6 per cent to 2.3 per cent in the past one year. The absolute level of such loans rose 70 per cent last year, particularly for state-owned banks.

    In October, RBI raised the risk weightage on residential housing loans of Rs 75 lakh and above, to 125 per cent and capped the loan to value ratio at 80 per cent.

    RBI warns banks on real estate valuation frauds
    CommentQuote
  • Originally Posted by realacres
    Why sorry man?? We agree to disagree & we all like to know both sides of the coin :).


    I can inform that US has secretly sold several tonnes of gold without official declaring it. The Fed knows it well. Infact, there have been cases where tungsten bars are gold plated & kept in the reserve so as to show all is fine. In reality, it is not the case. Several countries in west are doing this.


    FBI cum CIA cum Fedral Reserve cum Super-Man style comment...:D
    Yeah kaha se information mila.....realObamaji...
    CommentQuote
  • Best way to calculate whether we are in a bubble or not - calculate the gms of gold per sft of RE.

    Currently, property prices in comparison to gold prices are not in bubble territory.

    On the other hand, gold might be in bubble territory
    CommentQuote
  • Originally Posted by Venkytalks
    Best way to calculate whether we are in a bubble or not - calculate the gms of gold per sft of RE.

    Currently, property prices in comparison to gold prices are not in bubble territory.

    On the other hand, gold might be in bubble territory


    Is it your formula?
    CommentQuote
  • Price per gm of gold is 2216 and re prices per sft are higher then this price in most of the places. That means RE is in bubble territory.

    Originally Posted by Venkytalks
    Best way to calculate whether we are in a bubble or not - calculate the gms of gold per sft of RE.

    Currently, property prices in comparison to gold prices are not in bubble territory.

    On the other hand, gold might be in bubble territory
    CommentQuote
  • Realty IPO......

    "There is absolutely no investor appetite for real estate IPOs. The sector is surrounded by so many negative factors," said COO Ambareesh Baliga of Way2Wealth Brokers.

    The opposing views are not uncommon at the beginning of property downturns, when realtors want to influence buyer sentiment with positive public statements despite pressure from buyers and analysts to lower prices.

    "My feeling is that the recession that we had was very short lived and some people haven't learned the lessons... They still feel that this is a very temporary phase and the demand will come back," said Pranay Vakil, chairman of property consultant Knight Frank India.


    India realty IPO pipeline blocked; await correction boost - The Economic Times
    CommentQuote
  • Originally Posted by rajtjrll
    FBI cum CIA cum Fedral Reserve cum Super-Man style comment...:D
    Yeah kaha se information mila.....realObamaji...



    These are just theories which keep coming up in documentries etc....

    Its very difficult to prove their veracity
    CommentQuote
  • US selling Gold - no authentic source

    Originally Posted by rajtjrll
    FBI cum CIA cum Fedral Reserve cum Super-Man style comment...:D
    Yeah kaha se information mila.....realObamaji...


    Well, i searched NET and couldn't find any authentic source of West (US) selling Gold. So i can't say i support what realacres said.

    Still, following links could be worth looking. Remember guys, smoke can't appear without fire.

    Ron Paul wants gold at Fort Knox audited: Financial News - Yahoo! Finance

    U.S Treasury secretly selling off Gold Reserves.
    CommentQuote
  • Originally Posted by bhuvang
    Well, i searched NET and couldn't find any authentic source of West (US) selling Gold. So i can't say i support what realacres said.
    Originally Posted by bhuvang


    Still, following links could be worth looking. Remember guys, smoke can't appear without fire.

    Ron Paul wants gold at Fort Knox audited: Financial News - Yahoo! Finance

    U.S Treasury secretly selling off Gold Reserves.


    Not all smoke is smoke - sometimes it is a magicians dry ice to mask sleight of hand !!!!

    Real Estate gold price denomination: I did some actual research and found these historical gold prices per 10 Grams in Rupee:

    1925 18
    1930 18
    1935 30
    1940 36
    1945 62
    1950 99
    1955 79
    1960 111
    1965 71
    (Rs)
    1970 184
    1975 540
    1980 1,330
    1985 2,130
    1990 3,200
    1995 4,658
    1996 5,713
    1997 4,750
    1998 4,050
    (Rs)
    1999 4,220
    2000 4,395
    2001 4,410
    2002 5,030
    2003 5,260
    2004 6,005
    2005 6,165
    2006 8,210
    2007 9,500

    Since I have actual DDA flat price data only from 1980 when it was 50,000 for 2BHK, I have calculated below the price of flat in gms psf:


    Gold price/ DDA FLAT PRICE in Rs/ DDA flat price in gold
    1980: 133 per gm (gold bubble)/ 50 psf = 0.37 gm psf
    1985: 213 per gm/ 250 psf= 1.2 gm psf
    1990: 332 per gm/ 800 psf= 2.4 gm psf
    1995: 465 per gram/ 1600 psf = 3.4 gm psf
    2000: 439 per gram/ 1600 psf = 3.6 gm psf
    2006: 821 per gram/ 3500 psf = 4.2 gm psf
    2009: 1570 per gram/ 8000 psf = 5 gm psf
    2011: 2200 per gram/ 14000 psf = 6.36 gm psf

    As per this data, excluding the 1980 price as being an outlier due to the 1979 oil crisis and historical peak of gold prices, average price from 1985 to 2009 has been about 2.7 gm psf. But there has been a secular trend of increasing RE prices from 1980 to 2011 which has shown about a 1gm psf increase every 5 years or so.

    Assuming 1gm psf in 1985, in 1990 it is 2 gm psf, in 1995 3gm psf, in 2000 4 gm psf, 2005 5 gm psf and 2010 6 gm psf.

    According to this trend of 20 years, RE has been increasing steadily and hence current levels probably represent fair value.

    I am unable to comprehend this trend properly or find any real explanation - we need to think about this. According to this trend, RE increases by 1gm of gold psf every 5years in India.

    I dont think anyone has ever talked about this that I have read about. This is new stuff.

    Probable cause: Increasing tendency to overvalue real estate as time goes on, because of "percieved" safe haven status. Otherwise in real prices, RE price should keep pace with inflation.

    Another cause for overvalue is because of changing location premium. In 1980, DDA flats bere built at the outskirts. Now they are in the center of the city.

    If we look at the prices for remote flats at outskirts of the city, prices would be:

    Gold price/ DDA FLAT PRICE Rs / DDA or builder flat price in gold/ Location at edge of city
    1980: 133 per gm (gold bubble) 50 psf = 0.37 gm psf (Yusuf Sarai)
    1985: 213 per gm 100 psf= 0.46 gm psf (East of Kailash)
    1990: 332 per gm 500 psf= 1.5 gm psf (Mayur Vihar)
    1995: 465 per gram 1000 psf = 2.15 gm psf (Dwarka)
    2000: 439 per gram 1000 psf = 2.27 gm psf (Gurgaon)
    2006: 821 per gram 1900 psf = 2.31 gm psf (Sohna Road)
    2007: 950 per gram (RE bubble) 3300 psf = 3.47 gm psf (Sohna Road)
    2009: 1570 per gram 3000 psf = 1.91 gm psf (NOIDA Expressway)
    2011: 2200 per gram (Gold re-bubble?) 2000 psf = 0.9 gm psf (NOIDA Extention)

    According to this analysis, cost of a flat is betwee 1 to 2 gm psf in the edge of the city. When the flat price drops to 0.5 gm psf, then gold is getting into a bubble. When cost psf drops to below 0.5 gms psf, then price of gold is likely to crash.

    Conversely, when price of RE rises above 2.5 gms psf, then RE is overvalued. When price of RE is more than 3-3.5 gms psf, then RE is likely to crash.

    According to this analysis, current RE valuation is fair value - whereas gold is getting overvalued. Chances of gold prices correcting are more than RE prices correcting.

    I got my gold prices from this web site:


    Gold: Your 'loss-proof' investment

    Please Note: Gold bubble in 1980 at 850 dollars per ounce amounted to 133 Rs per gram. But while price of gold collapsed by 1985 in USD, in Rs, it actually appreciated to 230 Rs per gram - because of massive Rupee depreciation. So periods of massive gold appreciation is Rupees are more likely to be followed by a collapse of the Rupee rather than collapse of gold prices in Rupee.

    Hence, we might come out of this current gold bubble with even higher prices of gold a few years down the line, because of massive Rupee depreciation.

    Mark my words. I did an analysis of US vs. Indian RE prices a while ago. It pointed to Ratio of 2: 1 for US: India price. Currently it is 1:1, which means India houses are overprices against US house price.

    Either Indian prices have to fall or Rupee has to fall. So again, there are indications for massive Rupee depreciation
    CommentQuote
  • Originally Posted by Venkytalks


    Since I have actual DDA flat price data only from 1980 when it was 50,000 for 2BHK, I have calculated below the price of flat in gms psf:

    Either Indian prices have to fall or Rupee has to fall. So again, there are indications for massive Rupee depreciation


    Venky - 'Hats off' to your analysis...

    My view : This is innovative stuff and could be very correct as well.... but my thinking is that it is past statistics..and, for that matter, you might find a correlation between RE and other commodities as well.... Why not silver and RE, or any other agriculture product (Potato, Rice, Wheat..) and RE ..

    If you compare any two products with ample historical data, you can definitely generate a 'mathematical equation' justifying the relationship...but the real question is how true that it will be for future?

    Like I said it could be correct as well.. but, in general, I dont see logical relationship between gold and RE. Gold is an international commodity and RE very local.... Probably comparing factors like population and RE, jobs and RE etc can throw better models for prediction.
    CommentQuote
  • What will happen to RE prices in India if rupee depreciated to the level of 60 to a dollar in 2 years?
    CommentQuote
  • Originally Posted by ThePunjabi
    What will happen to RE prices in India if rupee depreciated to the level of 60 to a dollar in 2 years?


    50% steep hike as NRI pushed the money in RE.
    CommentQuote
  • Appreciate efforts put in analysis and concrete numbers.
    Thanks
    Originally Posted by Venkytalks


    Not all smoke is smoke - sometimes it is a magicians dry ice to mask sleight of hand !!!!

    Real Estate gold price denomination: I did some actual research and found these historical gold prices per 10 Grams in Rupee:

    1925 18
    1930 18
    1935 30
    1940 36
    1945 62
    1950 99
    1955 79
    1960 111
    1965 71
    (Rs)
    1970 184
    1975 540
    1980 1,330
    1985 2,130
    1990 3,200
    1995 4,658
    1996 5,713
    1997 4,750
    1998 4,050
    (Rs)
    1999 4,220
    2000 4,395
    2001 4,410
    2002 5,030
    2003 5,260
    2004 6,005
    2005 6,165
    2006 8,210
    2007 9,500

    Since I have actual DDA flat price data only from 1980 when it was 50,000 for 2BHK, I have calculated below the price of flat in gms psf:
    CommentQuote
  • Excellent!

    Originally Posted by Venkytalks


    Not all smoke is smoke - sometimes it is a magicians dry ice to mask sleight of hand !!!!

    Real Estate gold price denomination: I did some actual research and found these historical gold prices per 10 Grams in Rupee:

    1925 18
    1930 18
    1935 30
    1940 36
    1945 62
    1950 99
    1955 79
    1960 111
    1965 71
    (Rs)
    1970 184
    1975 540
    1980 1,330
    1985 2,130
    1990 3,200
    1995 4,658
    1996 5,713
    1997 4,750
    1998 4,050
    (Rs)
    1999 4,220
    2000 4,395
    2001 4,410
    2002 5,030
    2003 5,260
    2004 6,005
    2005 6,165
    2006 8,210
    2007 9,500

    Since I have actual DDA flat price data only from 1980 when it was 50,000 for 2BHK, I have calculated below the price of flat in gms psf:


    Gold price/ DDA FLAT PRICE in Rs/ DDA flat price in gold
    1980: 133 per gm (gold bubble)/ 50 psf = 0.37 gm psf
    1985: 213 per gm/ 250 psf= 1.2 gm psf
    1990: 332 per gm/ 800 psf= 2.4 gm psf
    1995: 465 per gram/ 1600 psf = 3.4 gm psf
    2000: 439 per gram/ 1600 psf = 3.6 gm psf
    2006: 821 per gram/ 3500 psf = 4.2 gm psf
    2009: 1570 per gram/ 8000 psf = 5 gm psf
    2011: 2200 per gram/ 14000 psf = 6.36 gm psf

    As per this data, excluding the 1980 price as being an outlier due to the 1979 oil crisis and historical peak of gold prices, average price from 1985 to 2009 has been about 2.7 gm psf. But there has been a secular trend of increasing RE prices from 1980 to 2011 which has shown about a 1gm psf increase every 5 years or so.

    Assuming 1gm psf in 1985, in 1990 it is 2 gm psf, in 1995 3gm psf, in 2000 4 gm psf, 2005 5 gm psf and 2010 6 gm psf.

    According to this trend of 20 years, RE has been increasing steadily and hence current levels probably represent fair value.

    I am unable to comprehend this trend properly or find any real explanation - we need to think about this. According to this trend, RE increases by 1gm of gold psf every 5years in India.

    I dont think anyone has ever talked about this that I have read about. This is new stuff.

    Probable cause: Increasing tendency to overvalue real estate as time goes on, because of "percieved" safe haven status. Otherwise in real prices, RE price should keep pace with inflation.

    Another cause for overvalue is because of changing location premium. In 1980, DDA flats bere built at the outskirts. Now they are in the center of the city.

    If we look at the prices for remote flats at outskirts of the city, prices would be:

    Gold price/ DDA FLAT PRICE Rs / DDA or builder flat price in gold/ Location at edge of city
    1980: 133 per gm (gold bubble) 50 psf = 0.37 gm psf (Yusuf Sarai)
    1985: 213 per gm 100 psf= 0.46 gm psf (East of Kailash)
    1990: 332 per gm 500 psf= 1.5 gm psf (Mayur Vihar)
    1995: 465 per gram 1000 psf = 2.15 gm psf (Dwarka)
    2000: 439 per gram 1000 psf = 2.27 gm psf (Gurgaon)
    2006: 821 per gram 1900 psf = 2.31 gm psf (Sohna Road)
    2007: 950 per gram (RE bubble) 3300 psf = 3.47 gm psf (Sohna Road)
    2009: 1570 per gram 3000 psf = 1.91 gm psf (NOIDA Expressway)
    2011: 2200 per gram (Gold re-bubble?) 2000 psf = 0.9 gm psf (NOIDA Extention)

    According to this analysis, cost of a flat is betwee 1 to 2 gm psf in the edge of the city. When the flat price drops to 0.5 gm psf, then gold is getting into a bubble. When cost psf drops to below 0.5 gms psf, then price of gold is likely to crash.

    Conversely, when price of RE rises above 2.5 gms psf, then RE is overvalued. When price of RE is more than 3-3.5 gms psf, then RE is likely to crash.

    According to this analysis, current RE valuation is fair value - whereas gold is getting overvalued. Chances of gold prices correcting are more than RE prices correcting.

    I got my gold prices from this web site:


    Gold: Your 'loss-proof' investment

    Please Note: Gold bubble in 1980 at 850 dollars per ounce amounted to 133 Rs per gram. But while price of gold collapsed by 1985 in USD, in Rs, it actually appreciated to 230 Rs per gram - because of massive Rupee depreciation. So periods of massive gold appreciation is Rupees are more likely to be followed by a collapse of the Rupee rather than collapse of gold prices in Rupee.

    Hence, we might come out of this current gold bubble with even higher prices of gold a few years down the line, because of massive Rupee depreciation.

    Mark my words. I did an analysis of US vs. Indian RE prices a while ago. It pointed to Ratio of 2: 1 for US: India price. Currently it is 1:1, which means India houses are overprices against US house price.

    Either Indian prices have to fall or Rupee has to fall. So again, there are indications for massive Rupee depreciation



    This kind of analysis is done for RE Vs Gold in US market.

    I just have 2 points to make.

    1. DDA flats have consistently gone up in relation to Gold. Therefore DDA flats are heading towards bubble territory and gold is relatively out of bubble zone wrt DDA.

    2. If you take 1980 or 1985 (or somewhere in between) as he BASE of the super boom of last 25 years - after the 1970s stagflation - RE has boomed from a base of 1985 all the way upto 2005. Since then relative to gold RE is climbing down and is close to Gold ratio of 1985.

    Therefore what we can surmise from this is, RE boomed all the way from 1985 to 2005 and is swinging down back to 1985 ratio. Main reason for this is the increasingly easy-money policies of Govt.

    On the other hand, Gold declined all the way from 1985 to 2005 relative to RE and is now racing up to catch the 1985 ratio again.

    How much further gold will rise against RE? Will it beat the 1985 ratio and become a better 25-year performer wrt RE? When will the run end?

    We are definitely looking at gold heading into bubble territory. But is it actually in a bubble? Extraordinary circumstances may suggest that gold may go to extraoedinary levels even against RE.

    cheers
    CommentQuote