Home Price/Gold Ratio - Do Interest Rates Really Matter?

[Mike Roy]

Hi All - I'm curious to hear how much stock you all put into the US Home Price/Gold Ratio:

https://smaulgld.com/wp-content/uploads/2015/03/US...

Personally, I like to look at the price of assets relative to other assets because it controls for inflation.  While it will never tell you if that asset is ABSOLUTELY expensive/cheap, it does tell you if it is RELATIVELY expensive/cheap in relation to the asset you're comparing it to. 

The chart seems to be telling us that, right now, gold is relatively expensive and housing is relatively cheap.  Obviously, you'd want to look at other data, such as home price/median income ratio, in evaluating whether housing is absolutely cheap, but home price/gold is an interesting data point.

What I also find interesting is that home price/gold seems to suggest that interest rates do not have a substantial impact on the relative value of home prices, despite conventional wisdom.  Housing went from being extraordinarily cheap in 1980 to sky-high bubble status in 2005 back to cheap again, and interest rates were generally falling the whole time.

Do any of you use this ratio as a long-term metric in evaluating your overall exposure to real estate?