“I really think this banking collapse and govt’ bailout will require so much printing of money, that the dollar will be seriously devalued.”
In that case all hard assets including Real estate and stocks will appreciate in dollar value.
Gold is a commodity and usually 60% of world buying in tonnage is bought by jewellers in India. But with the high prices last quater buying by this section has decreased by over 60% YOY. In dollar terms this might be around 30%. In addition to that some European central banks are expected to dump a significant portion of their annual sellable gold into the market before the sept 30 deadline. Gold market actually looks bleak for the next few weeks.
You should look at the gold market objectively like we are looking at the RE market. I’ll put some nos. off the cuff here, but it would be more or less close to the actual nos. Around 5% of annual gold (including mine production, scrap metal conversions and the central bank liquidations) is consumed for industrial applications, 20% for investments, 60% for the jewellery market in India. This no. used to be similar for both tonnage and dollar values until last year. Jewellery consumption in India is actually an indirect investment which will create huge divergence between tonnage and dollar value demand. So there will be some significant upward resistance in tonnage demand as the prices increase. Only 5% of gold will not have a direct effect on demand due to prices (although some indirect effect).
Gold is way more liquid than RE, so can go down much faster. If you are planning for an eventuality of Fed printing more money you are actually better off owning RE than Gold. Only problem with it is that most RE investments are leveraged and increases risk. Even if it is not highly leveraged it has to be a significantly big investment.
