Then there is the "utility value" of a "home" and it's role in the personal finance decisions of a typical family.

Once upon a time home prices were stable at 3 to 3.5 times the income of the owner or similar ratios on a median basis to an area or city.

In the absence of a *substantial* increase in the income of everyone... the prices of most homes simply MUST come down and stay down from those lofty and irrational numbers.

Folks never stop and then start to think about things.

First, they should ask themselves, "Where does the money come from that banks get and then rent to mortgagees for mortgagees to buy a deed to a house?"

Next, they should ask themselves, "If the buying power of Americans' incomes is falling, how can mortgagees buy things to live -- food, heating, transport, clothing -- and pay debt service on rented cash (a mortgage)?"

Consumption based on credit cards and inflation-driven house prices is no way to run an economy.

The U.S. Economy has been shorted. The world sees Americans lack enough income to pay debt service on mortgages and credit cards.

Thus, houses as a collateral asset used to borrow against have become worth much less.

Devaluation happens when street-level prices of assets fall as folks get forced to sell assets (French for "enough") to cover debts.

Investors no longer want to risk cash for mortgage-backed securities as they see Americans lack the means to pay for rented cash (mortgages) and the other things to sustain living.

With folks liquidating to cover debts and with investors no longer parting with cash for mortgages, prices must fall.

House "appraisals" and other bogus beliefs do not set house prices.

Like all things, a house is worth only what the next guy is willing to pay from his opened checkbook.

Gold has numerous uses.

Its highly useful in electronics (fantastic conductivity mixed with great corrosion resistant), its reflects nearly all forms of radiation making it useful for shielding, and it is ridiculously stable chemically, making it a great addition to any alloy if you can afford it.

Gold chemical compounds have numerous uses in industry. Gold is being explored for use in various types of nanotechnology.

If it wasn't used in jewelry you'd see it in a lot of other places.

Yeah, quite a stretch. Schiff's like some of these kooks that thought Bear Stearns would fail, or AIG, or Citicorp, or Wachovia, or Fannie Mae, or GM. Dollar crash? Preposterous. And that's right, gold's utility as a store of value is dubious at best. What can be made of it? Certainly nothing of value. Besides, you can't find physical gold now anyway, because everyone's bought it all up. These fringe people need to listen to mainstream economists.

This is the wrong question. We should be asking how to PREVENT PRICE BUBBLES from forming in the first place. How? Return to a free market, sound money system, such as using gold (i.e., real money) again.

Amen.

Gold has many more uses than you might think. Gold is used to flash copper circuitry in order to prevent oxidation. This is done for a variety of reasons. I would also like to say that both Ron Paul and Peter Schiff need to continue spreading the truth, and Ron Paul is a personal hero of mine.

Thanks for the article Jay,
I can now add you to the long list of economist NOT to listen too any longer. Gold is literally used in 100's of industrial applications outside of jewelry such as Aero-Space, denistry and electronics...just to mention a few. Lets' not forget, Gold is too expensive to use by chance. Instead it is used deliberately and only when less expensive substitutes can not be identified.
Finally, where were you in 2006 when Mr. Schiff was forecasting to amazing accuarcy the economic conditions of today? Were you like Ben Stein and a long list of other, so called economist who were laughing at Mr. Schiff? I would do the Google search to see exactly what your opinions were at the time. However, your comments on the "Lack of Utility" of Gold told me all I needed to know about you. "You are the weakest link...Good bye!"