Gold’s Impact on your Ability to buy a Home
Gold hit $1009 an ounce this week. Right now the dollar is dropping in value around the world and the dollar value of gold is going up. If you are trying to buy a house right now, inflation could begin to be an issue on two levels.
The first level is that a house is a real physical thing. It is ‘real’ estate or ‘real’ property. Money, cash is just an item with a perceived value. When you try to buy real stuff with something of diminishing perceived value, you have to spend more and more of the money to actually buy something.
That takes a toll on banks as well. Interest rates are set according to a banks need to make a profit on loans, to cover risk on loans and to fight inflation. If inflation increases (as the value of the dollar decreases) then banks will have no choice but to increase mortgage interest rates. Otherwise when you repay a loan to a bank, you are essentially paying them less in real money than what you borrowed because the money they gave you at the origination was worth something and that same amount of money when repaid is worth less.
There is however something that you might have that may be worth more in cash now than when you originally bought it. That something is gold. If you bought a gold ring a few years ago when gold was selling for $380 an ounce, that ring could be worth three times as much now. If you bought it a couple years ago when gold was worth about $600 an ounce it could be worth twice as much very soon.
If you are looking to buy a home, (something real and useful) you might be able to come up with the down payment by selling some gold, possibly jewelry or other items. Similarly, you could use your jewelry to pay off your existing debt, or buy anything that is something real whether you are upgrading your home with a small business phone system or something else that you might be able to use earn more money, to earn a living or to survive a recession while inflation attacks your cash.
