atlunch - It doesn't happen ALL the time, but it happens regularly and consistently. Yes, the gold price has done well over the last few years, but poorly relative to most other commodities and stands significantly below where it could be using three of the basic ratio's or calculations to judge 'fair value'.
Using the long term Gold/Oil ratio of around 12 would give $1800 odd
Using inflation adjusted price would give somehwere around $2200
Using the fact that up until 1999 or so, gold traded at around a 10% discount to platinum, now $2100 or so would give us around $1900.
I appreciate these are loose calcs, but they all indicate that gold is underpriced by about half. All at the time fundamental confidence in the US is dollar is arguably the lowest it has ever been, with good reason. Its no coincidence.
Re the article, you can't have read it in 7 minutes - its a half hour read. Now, I wouldn't say it's completely devoid of emotion, but he's certainly no Bob Chapman - he's what I'd call emotive. Personally I reckon the article lays out the case and covers all the main parts of it, which few articles on the subject do. It also references a great majority of the material. Just dont throw it in the too hard basket because it challenges already held beliefs!
That said, I reckon 50-70% more medium term, around 1500-$1700, longer term it depends how out of control global inflation gets, but $5000 would certainly not suprise me.
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