Here, these recent news items capture the bullish buzz surrounding the precious metal:"Gold $2,000."(AP) AND -- "NIA Says Gold Could Rise to $5400. It looks like this breakout above $1000 could be permanent." (Reuters)
"High Gold Prices Here To Stay... The gold market has spoken loudly and definitely in the longer run." (Forbes)
Gold prices are still 53% below their inflation-adjusted 1980 peak. "Even at above $1000/ounce, gold still looks cheap in terms of other financial assets." (Bullion Vault)
"Bargain hunting boosted gold futures. Prices below $990 have increasingly been seen as a buying opportunity." (Wall Street Journal)
"Gold Prices Show No Signs Of Slowing... Analysts say there's little standing in the way of more advance. The only way this doesn't continue would be a stronger dollar. I can't find anybody out there that is saying that is going to happen." (Associated Press)
To summarize the picture: Since 1913, the purchasing power of the dollar has fallen 96%. To match that loss, gold should be up 25 times from its pre-1934 fixed value of $20.67.
It's not. It's up 50-times. On this basis, gold is 50% overvalued.
In Bob Prechter’s own words:
"A gold buyer today must be really convinced that inflation is going to take off in order to justify buying at today's prices. Of course, buyers today are convinced that inflation will rage, just as they were convinced that inflation was no threat at all back when gold was at $253.”
MyView
Currency is fiat money, but, this fiat money is relative. It comes in pair, i.e. USD/EUR, USD/Yen.
Gold is real money? Well Gold contracts traded in Comex is also fiat money, isn't it? But it is also relative to USD dollar and other currencies. Although gold price per USD has increased lately, but against Australian/Canadian/other major currencies, it dropped, i.e. get less currency.
Gold has appreciated against USD.
Gold has depreciated against AUD.
AUD has appreciated against USD.
So if you are an American and has lots of USD, will you buy gold or AUD?
No comments:
Post a Comment