We know gold has become expensive and that houses have become relatively inexpensive. If you measure the average cost of a house divided by the price of gold per ounce, you get the cost of the house in ounces of gold, instead of dollars. Now, take a look at this chart.
Does this suggest houses are under-priced, or that gold is over-priced? If you tried to arbitrage assets, you would sell gold and buy houses.
I think the relationship is more interesting than meaningful. Gold is primarily a measure of fear. I don't think houses have anything to do with fear. However, it may predict an inflection point in the economy, and I will study that more.
