Introduction
For decades the property market appeared to climb unstoppably – at least when measured in euros or other paper currencies. Houses and flats were regarded as “concrete gold”, a safe haven in an era of low interest rates and inflation. But what happens when real estate is valued not in inflation-prone currencies, but in gold? The results are surprising: in nominal terms property prices have risen, yet in real terms – measured in gold – they are in decline. This discrepancy is more than an academic curiosity. It exposes a monetary illusion that investors in particular ought to understand. In this article we analyse the development of the property market against the gold price on a scientifically sound but accessible basis. We examine historical extremes such as the Weimar hyperinflation, current global trends, and draw lessons for the years ahead. Numerous charts and facts underpin the analysis.
Nominal vs. real performance: real estate measured in gold
Property prices appear to rise ceaselessly decade after decade – but that holds only in nominal terms, that is, in the respective currency. In real terms, valued in gold, a very different picture often emerges. While paper money loses purchasing power, gold remains a stable yardstick of value over long periods. As a result, the supposed record prices on the property market are considerably relativised.
Fig. 1: Comparison of the MSCI World Real Estate Index nominally in EUR – Source: GR Asset Management, Dr. Uwe Bergold (green curve, top) and in real terms in gold (red curve, bottom) from 1999 to early 2025.
The opposing trend is striking: valued in euros the index reaches levels almost twice as high as in 1999, while valued in gold it falls to a fraction of its former value. Explanation: in nominal terms the index stands at the start of 2025 roughly at the 2007 peak (the onset of the global financial crisis), whereas measured in gold it is already back at the 2009 low – the level at the end of the financial crisis. Since its secular high around the year 2000, the global property index has lost more than 82% of its purchasing power when calculated in gold. In euros, by contrast, it shows a gain of almost 100%. In other words: the currency (€) has lost more value since 2000 than the properties gained. The unit of measurement is shrinking faster than the thing being measured. This monetary illusion makes real estate appear “value-stable”, even though it has long been losing value in real terms. The consequence: anyone who, 20 years ago, invested in a corresponding quantity of gold instead of a house holds a substantially higher real value today.
What lies behind the discrepancy?
Why does such a pronounced discrepancy arise between nominal and real (gold-valued) property-price performance? Two factors are principally at work:
- Monetary debasement (inflation): central banks have expanded the money supply for decades. Since the break from the gold standard in 1971, paper money has been subject to no fixed anchor. As a result, a unit of money (e.g. €1) loses purchasing power. The prices of all assets – whether shares, real estate or commodities – rise nominally, in part irrespective of their real worth. This effect is the source of the monetary illusion. Real estate is regarded as a tangible asset and is supposed to offer inflation protection, yet when the currency loses value sharply, a nominal increase in a property’s price can still amount to a real loss of value. That is precisely what we see in the example above: the euro lost so much value that property could rise nominally while falling in real terms.
- Economic cycles: like other asset classes, real estate is subject to business and credit cycles. Phases of a strong economy and cheap credit drive prices up; recessions and crises push them down. Viewed in euros, many of these cycles are overlaid by the general monetary debasement – so that it looks as though the long-term direction is always upward. Viewed in gold, the cyclical character emerges far more clearly. Thus the World Real Estate Index had a high around 2007 (before the financial crisis) and fell until 2009 (after the crisis) – both nominally and in real terms. But the secular high (the long-term peak) was reached around 2000, when the index was at its most expensive measured in gold. Since then it has been in a long-term bear market in gold, despite intermittently rising nominal prices.
Also of interest is the leading-indicator property of the real-estate market relative to other markets. Owing to lower liquidity and longer transaction times, real estate often reacts to monetary policy with a delay – yet it can signal trends early. As far back as the end of 2021 there were indications that “concrete gold” had reached its zenith and that investors were increasingly shifting into actual gold. A contrarian market commentary in December 2021, for instance, pointed to a sell signal in the German property market long before the wider public perceived any cooling. These indications fitted the observed real weakness of property values.
Historical parallels: learning from extreme inflation
Phases of extreme inflation show with particular drama how nominal and real values can diverge. A frequently cited example is the Weimar hyperinflation in Germany in 1923. At that time the paper mark lost value so rapidly that real assets, calculated in gold, remained almost stable, while nominal prices shot into the astronomical.
At the end of the Weimar hyperinflation – in November 1923 – Americans in Berlin could buy entire apartment buildings for a single 100-dollar note. Why was that possible? At the time, that 100-dollar note corresponded to roughly 5 ounces of gold. Expressed in reichsmark it was, by the end, worth an incredible 420 trillion mark (after the currency reform, 420 rentenmark). Put differently: with the value of 5 ounces of gold one could acquire a building, because the paper mark had become practically worthless. Property prices in gold, by contrast, remained comparatively low – a house simply cost a few ounces of gold, much as before the inflation. This example illustrates that tangible assets (such as real estate) may explode in nominal price yet, in real terms, merely reflect their true worth in a stable unit (gold).
A further striking example is provided by the stock market of that period: the German share index (forerunner of the DAX) stood at 100 points in 1913 (the gold-mark era). In nominal terms it rose to 20 trillion paper mark shortly before the 1923 currency reform – a seemingly gigantic stock-market boom. Valued in real terms in gold, however, this index was practically identical both before and after the reform: around 20 gold mark, which in 1923 corresponded to about ¼ ounce of gold. The real decline amounted to ~80% over 10 years, despite the grotesque nominal figures. This “pseudo-boom” was pure inflation – the monetary illusion in its purest form.
Fig. 2: Share and property prices over more than a century – each compared in US dollars (nominal, green) and in gold (real, red). Source: GR Asset Management, Dr. Uwe Bergold
Top: US share index Dow Jones Industrial (DJIA) from 1897 to 2025. Bottom: US house-price index (Case-Shiller house prices) from 1960 to 2024. One can see that both asset classes, measured in gold, are subject to large fluctuations over the long term and had secular highs around the turn of the millennium. Analysis: both pairs of curves show a pronounced real high around the year 2000 (red lines). This was followed by a first downward cycle in the 2000s (point A) and – thanks to massive monetary policy such as QE and zero interest rates – an interim recovery in the 2010s (point B, an “echo bubble”). In the 2020s both shares and real estate are now in the final downward movement towards trough C. The key point: both tangible assets offer only limited inflation protection. While real estate and shares protect against moderate inflation better than cash, an economic contraction accompanied by simultaneous monetary debasement (stagflation) can cause even tangible assets to lose dramatically in real terms. The public often perceives only the nominal prices (“beneath the monetary paper-currency surface”), while in real terms a contraction has long been under way. That is exactly what happened after 2000: nominal new highs, but a creeping downward trend in real terms.
Alternative visualisation: instead of combining both asset classes (shares and houses) in a single chart, one could create separate index-ratio charts for each asset class. For example, a chart showing DJIA/gold over time, and a second showing the property-price index/gold. This would bring out more clearly when shares and houses respectively were expensive or cheap relative to gold. A logarithmic scale would likewise be helpful here, in order to better represent the percentage movements over more than 100 years and to depict both moderate and extreme phases appropriately.
Property prices in gold: hyperinflation and an international comparison
Fig. 3: Gold price in German reichsmark 1918–1923. Source: GR Asset Management, Dr. Uwe Bergold
This chart illustrates how dramatic the debasement of the reichsmark during the hyperinflation was: 1 ounce of gold cost a few hundred mark in 1918, but trillions of mark in 1923. (The scale on the right is logarithmic; each step corresponds to a 10- to 100-fold increase.) Significance: during the collapse of the paper-mark currency, the wealthy could buy large real values with small amounts of gold, as described above. Foreign investors, or those who held gold, were at an advantage – real estate, factories or companies were “cheap” for them to acquire. This extreme historical case shows that, measured in stable value (gold), German tangible assets were not suddenly worth many times more in the early 1920s; rather, the currency was almost worthless. For investors today this is a warning: the purchasing power of money is at least as important as the nominal price increase of an asset.
Similar developments have occurred, and continue to occur, outside Germany too. Japan is frequently cited as the next example, since it has had high public debt and an ageing population for decades. Japan’s public debt stands at around 260% of GDP – a record among industrialised nations. Although inflation in Japan was very low for a long time, a Japanese person today needs only about 2.3 ounces of gold to be a millionaire (calculated in yen). Twenty years ago, considerably more ounces were required. This shows that the yen, too, is losing purchasing power against gold.
Fig. 4: Gold price in Japanese yen 1995–2025. Source: GR Asset Management, Dr. Uwe Bergold
The chart shows the rise in the gold price in yen over 30 years. Since the late 1990s gold has gained value massively in yen (or, equivalently, the yen has depreciated heavily against gold). The sharp increase since around 2008, and again from 2019, is particularly striking. Interpretation: calculated in yen, the gold price races from high to high, which means that confidence in the Japanese currency is dwindling. Other industrialised countries have different underlying conditions, but in the long run all fiat currencies have followed the path of depreciation. Many developing countries are experiencing even more extreme depreciation (e.g. Venezuela recently). The decisive question is: will we, in the end, have a host of “paper millionaires” much as in Weimar in 1923, whose wealth looks enormous in domestic currency but has shrunk sharply in real terms – in gold or hard purchasing power? History suggests: yes. For by the end of the current crisis (which began around 2000 and recurs roughly every 80–100 years), all interest-bearing asset classes will have lost more than 90% of their purchasing power in gold. Real estate, shares, bonds – regardless of their nominal prices in euros, dollars or yen – are likely to lose value dramatically in real terms once the currency crisis reaches its peak.
Alternative visualisation: to make the currency depreciation more tangible, one could also construct an index of the G7 currencies against gold. This would show how much the euro, dollar, yen & co. have lost in value against gold since 2000 (in per cent). An alternative chart could depict the quantity of gold required to buy a property over time – e.g. “How many ounces of gold were needed in 2000 vs. 2025 to buy an average property in Tokyo?”. Such depictions place the relative value of real estate impressively in proportion to gold.
Outlook: the role of gold and commodities in the current cycle
In light of the developments outlined, the question for investors is: where is the journey heading in the coming years? Several signs suggest that we are at the beginning of a secular bull market (long-term upward movement) in gold and commodities – and correspondingly in a downward phase for property values calculated in gold.
A glance at the past reveals a recurring pattern: over recent decades, gold bull markets occurred at intervals of roughly 30 to 40 years and lasted around 10–12 years. Thus gold rose enormously from 1968 to 1980 (from the dissolution of the Gold Pool to the peak after the oil crisis) and again from 1999 to 2011. Currently – after an interim bear market from 2012 – the third strategic gold bull market since 1968 is under way. If one again counts 12 years from 2015/2016, the final high could be reached around 2027/28. This forecast is of course no certainty, but historical cycles and monetary-policy conditions (cue: enormous indebtedness, geopolitical tensions) argue in its favour.
Fig. 5: Gold price vs. gold-mining share index. The chart compares the gold price in USD. Source: GR Asset Management, Dr. Uwe Bergold
(black line) with the price of the ASA Gold Mining share (blue) from 1978 to 2025. One can see that mining shares at times act as a lever on the gold price – in upward phases they rise more strongly in percentage terms. Observation: both earlier gold bull-market cycles (the late 1970s and the 2000s) brought enormous gains for gold-mining shares. In the chart one can see, for instance, the rise of the blue curve at the end of the 1970s clearly outpacing the increase in the gold price. In the 2000s, too, miners advanced markedly. At present, momentum once again appears to be entering the sector.
Besides the gold price itself, one indicator deserves particular attention: the rolling 3-year performance of the gold-mining index (BGMI – Barron’s Gold Mining Index). Historically, in the major gold bull markets this indicator turned twice from negative to positive, thereby giving a tactical buy signal for mining shares and gold.
