A few days ago, I stumbled upon an article or perhaps a meme on Facebook that suggested the same amount of gold from 100 years ago could buy you real estate today. Intrigued by this claim, I decided to explore further and compare real estate prices in my native Riga to spot gold prices. My findings, particularly when comparing 2007 with 2023, are quite interesting.
Let's start with some basic data:
In October 2023, the average price of standard apartments in Riga was 852 euros per square meter. This price is 47% lower than on July 1, 2007, when the average price of an unrenovated standard apartment reached an all-time high of 1620 euros per square meter.
To delve deeper, I conducted some simple calculations to compare the cost of purchasing a 50m² apartment in Riga back in 2007 with the price of spot gold at that time. On July 1, 2007, the spot gold price was 501 euros per ounce.
To buy a 50m² apartment in 2007, we would need approximately 81,000 euros (50m² * 1620 euros/m²). With 81,000 euros, one could purchase around 161.68 ounces of spot gold (81,000 euros / 501 euros per ounce).
Following the analogy mentioned earlier, if the theory holds true, we should be able to get the equivalent of 161.68 ounces of spot gold for whatever the apartment price is in 2023.
Let's see how this plays out. In 2023, the new price of a standard apartment in Riga is 852 euros per square meter. Thus, a 50m² apartment would cost 42,600 euros (50m² * 852 euros/m²).
Now, let's compare this with the spot gold price in October 2023, which is approximately 1743 euros per ounce. For 42,600 euros, we could buy around 24.44 ounces of spot gold (42,600 euros / 1743 euros per ounce).
This comparison reveals a stark difference:
- In 2007, 81,000 euros could buy 161.68 ounces of gold.
- In 2023, 42,600 euros could buy only 24.44 ounces of gold.
So, while the price of gold has significantly increased over the years, real estate prices in Riga have not kept pace. This highlights the divergent trends in the value of gold versus real estate in Riga over the past 16 years.
Sadly, we didn’t purchase 190 ounces of gold back in 2007. However, it's never too late to explore new investment opportunities. At Terramatris Crypto Hedge Fund, we actively buy tokenized spot gold, providing a modern and accessible way to invest in this precious metal.
In conclusion, if we had invested in gold rather than real estate in 2007, the value of our investment would have appreciated significantly more. This insight underscores the importance of considering diverse investment strategies and understanding how different assets can perform over time. For those looking to make savvy investments today, exploring options like tokenized spot gold with Terramatris Crypto Hedge Fund can be a prudent choice.