Historical patterns suggest that the real estate market is reaching its peak. Coupled with this, a burgeoning debt crisis looms on the horizon. Economies operate in cycles, one of the most influential being the “real estate cycle,” which lasts approximately 20 years. The current cycle is expected to hit its peak in 2026, potentially resulting in a real estate crisis. This could, in turn, benefit gold and other reserve assets like bitcoin (BTC).
Traditionally, gold tends to reach its peak several years after peaks in real estate and stock prices. If history repeats itself during the current cycle, which began around 2012, gold could reach its next significant peak around 2031. This suggests that the price of gold could potentially multiply by up to 4.5 times, as was the case in the previous cycle.
Real estate analyst, Alan Longbon, elaborates that the real estate cycle is based on the law of rent. This law posits that real estate captures all economic profits. Regardless of what improvements are made to increase productivity, benefits tend to accumulate in the value of the land. This principle operates in the economy much like gravity does in physics: unseen but influential.
As a result, real estate prices rise for about 14 to 18 years, driven by economic growth and easy credit. They then reach a point where private debt is unsustainable and interest rates increase, triggering a correction. This pattern, which is clearly evident in the following chart, has recurred for over a century, reinforced by demographic and financial factors.
As the current cycle draws to a close, it presents promising prospects for gold. According to the pattern, we are in the final stages of the current cycle, with the peak expected in 2026. Longbon outlines seven signs indicating this, including a peak in homebuilder stocks; more flexible monetary policy; a peak in housing prices; a stock market peak; yield curve inversion; a declared recession; and a peak in commodities and gold.
Most of these points (aside from an officially declared recession) have already been observed since last year, confirming the end of the current real estate cycle is nigh. This could potentially boost gold, which has shown a clear correlation with the cycle.
During the previous cycle, for instance, the precious metal hit a peak in 2011 of USD 1,800 per ounce, just as the real estate cycle was bottoming out following the burst of the 2008 housing bubble. Currently, gold is on the rise. If history repeats itself and the pattern holds, the current price (around USD 3,400) could soar to over USD 15,000 per ounce by 2031, according to Longbon’s analysis.
However, gold isn’t the only asset that could benefit significantly from the end of the current real estate cycle. Bitcoin (BTC), the world’s largest digital currency, could also prosper. Like gold, BTC has gained recognition as a reserve asset during times of economic instability and a lack of confidence in traditional financial systems.
Bitcoin has demonstrated an increasing correlation with gold, particularly during periods of global uncertainty. This has led to a “new era for hard assets,” where capital seeks to shield itself from inflation, excessive debt, and structural imbalances in major economies. In this context, bitcoin has begun attracting the same types of institutional investments that have traditionally gone to gold.
A significant factor that could intensify this dynamic is the impending debt crisis in the United States. The country is contending with rising levels of public debt, with figures exceeding 37 trillion dollars and annual interest payments of over a trillion dollars. This situation threatens a loss of confidence in the dollar as a global reserve asset, historically driving both gold and bitcoin.
With the surplus of gold in institutional reserves and the growing demand for decentralized instruments, a significant portion of capital could potentially be driven towards bitcoin. This movement would be especially strong if the Federal Reserve were forced to resume monetary easing policies to confront a recession, as has historically occurred following the peak of the real estate cycle.
Essentially, while gold remains the classic reference point in times of crisis, bitcoin is positioning itself as its digital alternative. Both assets could see significant increases towards the end of the current cycle, especially if sovereign debt problems and inflationary pressure intensify.
Understanding the real estate cycle allows for the anticipation of significant economic changes, including movements in the price of reserve assets. If the pattern repeats itself, we are just a few years away from a new rebound in gold and bitcoin prices. This represents a potential opportunity for those who prepare in advance.
Robert Kiyosaki, the author of the best-seller “Rich Dad, Poor Dad,” champions this idea. He predicts a global monetary collapse and advises owning gold, silver, and bitcoin to increase wealth following the burst of the global debt bubble.
