What is your house worth in Gold?
Here’s a scary thing – if we take a look at the price of an average house in the UK at the beginning of 2009 with a price of £160,000 and convert that into US dollars.
In 2009, £1 would buy $1.51 US dollars so £160,000 x 1.51 = $241,600 US dollars.
Gold at the beginning of 2009 was trading roughly at $875 per ounce, so if we divide our house price in US dollars by the price of gold in US dollars, we find out how much our average house would have been worth in gold.
So, $241600 divided by $875 = 276 approx ounces of gold.
Hence our house valued at £160,000 in 2009 would have been worth approximately 276 ounces of gold or 17.2 pounds of gold.
Let’s compare these figures with the current price of gold and an average house price from today – assuming that the house is still worth £160,000 because house prices have not moved much since 2009 except in London.
So using todays prices, £1 buys $1.6 US dollars and the current gold price is $1686 dollars per ounce.
To find out what our average house is worth in gold today $256,000 divided by $1686 = 152 approx ounces of gold.
In January 2013 our average house price is worth 152 ounces or 9.5 pounds of gold – that’s roughly 45% less than in 2009!
I’m not sure what these figures mean, but it is an interesting comparison. Baring in mind that gold used to be the measure of wealth and was used as a standard in banking ie all money used to be backed up by gold.