BiggerPockets

I suspect that the gold investment and real estate investment (as a hedge) are two different motivations at the current time.

The gold bugs are buying because they have no faith in the dollar, or in the US government's ability to controll the economy.

Real estate is a hedge against inflation, so real estate will follow when interest rates go way up. Medium interest rates move people out of real estate because it raises the monthly payment. But high interest rates moves people into real estate because it (should) hold its value with the rate of inflation, ie: loss of the value of the dollar.

With high inflation, you get a different motivation to buy gold. those buyers are looking for hard assets that will keep pace with inflation.

My opinion: it is a very good time to buy real estate for buy and hold. It's still on sale. Gold, on the other hand is NOT on sale right now.

This is a whole new phenomenon, this real estate market we are in right now. I don't think we've seen the bottom yet. And how are people going to buy when they are losing jobs left and right? And most investors will be kicking themselves if they pay too much, anyway. So I think a lot of people are taking a wait and see approach, while the prices continue to fall.
Moneypenny

Which adds to the downward pressure on the demand curve...as it is, even rentals are down as more folks move in with relatives and/or friends. I think it's a great time to buy, rehab, and hold, but I don't think housing demand will pick up until at least 6 months after unemployment figures change their current trend. Must admit, I feel like a kid in a candy store right now seeing better deals almost daily. :cool:

I suspect we just have a timing issue. The most popular trade has been to sell dollars and buy other currencies or assets tied to the dollar like gold or oil. This is a very-very crowded trade and it could reverse in a hurry (See Dubai credit issue). People could flood back to the dollar and US Treasury's driving down rates even lower (Crazy I know).

But to the question at hand I suspect Gold will have its time in the sun through 2010. But then people will realize that Gold just stores wealth and doesn't create wealth and they will go looking for assets that produce returns like real estate and gold will loose 30% in the matter of weeks (Gold takes the stairs up and the elevator down).

Let the lemmings run gold up to $2,500 I will be buying real estate in 2010 and then when the lemmings come back in 2011 or 2012 I take the artificial pop in my net worth ... Should be fun

There are a few smart people saying that the DOW and Gold will be at the same price, i.e. DOW 3,000 and Gold at $3,000. I think that's VERY LIKELY!

In my opinion, it is absolutely certain that our economy will COLLAPSE in the near future (next 2 or 3 years). Our debt is skyrocketing and socialism is sweeping our country. One in 8 adults is receiving food stamps and one in 4 children receive food from food stamps. Fewer and fewer productive citizens simply can not afford to pay for more and more deadbeats! LOOK OUT BELOW - SHE'S GONNA BLOW!!!

What is gonna blow is the government realizing that it can not sustain the level of promises and the pendulum of personal responsibility will indeed swing back the other way.
This will prevent the entire collaspe of our economy, but will bring us very close indeed to that cliff.
So close that the road back will be a very slow one full of potholes (read opportunities here) for the astute investors who have learned how to navigate things.

In trying to answer that question, without going into the political side of things that have been injected here, I would answer that all bubbles not matter how they are created (in this case by the government stimulus) will at some time burst and that the govt role is to protect us from external foe (thus the wars) but not to protect us from ourselves. That is a responsibility that we all must learn.

Ah, such it used to be when values (dollars) were backed by gold, but then came inflation and recession at the same time. Now we are at a crossroads again and this time with gold rising and no confidence in this dollar, it will continue to plumit. Although this is inflationary, when compared to the pre-plummit period you will also find the RE values will still actually be down.

Therefore, we just may have rising gold and inflation and stable or lowering values, not the rising values that would traditionally occur.

I believe gold and silver will go up more. Real estate will drop more.

Gold is looking a bit parabolic for my taste over the last few weeks, but I also believe after some set backs, we have a long way up, before it crashes hard. I believe the days of 3 digit $USD gold are pretty much gone. I certainly could be wrong.

During the Dubai scare over thanksgiving gold tanked and shot right back up in the same day. It was not the dollar people fled too.

I am with MikeOH. Gold/Dow ratio somewhere around 1:1, Maybe 1:3. Not sure where that happens. At that point it will be time for me to sell gold/silver (if it is not contraband), and exchange it for something else of value.