here. Additionally, as I mentioned yesterday while gold is reaching new highs in nominal terms when prices in US Dollars it is not at new highs when priced in British Pounds although admittedly it is close. However, it is nowhere near new highs when priced in real (inflation adjusted) terms and so in my humble opinion still has plenty of upside potential if history is anything to go by.
Combine these two markets into a chart and it says a lot. The perfect play looks to have been to sell your house in the middle of 2004 moving your “sold to rent” fund that was released into gold. Looking at today’s chart combined with what I see happening out there in the world I’m pretty happy that I own some gold and am renting. The question from me now is will house prices halve from here, will gold double in price from here or will we see a bit of both. Today’s chart suggests we will see one of these three as the ratio returns to a point allowing an average house to be bought for 100 ounces of gold. I wouldn’t mind betting it will be a small increase in the real gold price and a lot of decrease in the real price of houses.
In nominal terms though I really have no idea as that will all depend on how much inflation the Bank of England will be successful in engineering before they are finally satisfied. I also have no idea whether they will succeed in their inflation goal which will erode the debts of the reckless. For that reason in addition to holding some gold I also continue to focus on ensuring that I protect the low risk portion or my portfolio against the ravages of inflation while minimising the downside if that inflation is not forthcoming. For now that is 19.2% of my portfolio in NS&I Index Linked Savings Certificates and 1.5% in Index Linked Gilts.
As always do your own research.