I am not sure about the mathematics of inflation adjusted pricing, I have not studied and try to understand it beside accepting it is an industry standard tool to compare things in different times. Just like DCF models there are flaws in the equations and slave to the practitioner's optimisation. Concerns aside there is logics in there.
Here is a long term moving average to get some numbers for the discussion on a monthly gold chart. Since I understand again the industry standard of the 200MA that a lot of professional is suppose to look at, I added a 100MA.
View attachment 275036
200ma monthly = $873
100ma monthly = $1284
Long term gold has the 2 ma widening and if I recall from Guppy MMA spreading between the 2 MA signifying strength of the trend although I am slimming down his method of usage. Its a long time ago I studied this tool.
SP500 monthly
View attachment 275054
Above the sp500 monthly and since you like to use the similar DOW, both will have the same trend, this one is much more violent on its way up don't you agree. If you believe that SP500 will keep continue going up in isolation to the fundamentals, why can't the gold price emulate these sort of trends? The 2000-2012 sell off at the time would look like the current gold sell off we just had so an equally strong exponential trend on sp500 could be replicated in an equally exponential gold trend?
In both the gold and sp500 monthly the moving averages are still pointing up!
Weekly gold chart
View attachment 275039
Gold weekly is about to get the long awaited bullish crossover.
200ma wk = 1281
100ma wk = 1203
daily gold price
View attachment 275045
Gold daily I think speaks volume about where the trend is heading don't you agree?
200ma daily = 1254
100ma daily = 1309
Broadly speaking the 3 time frame charts are all indicating there is no break down in the trend and direct opposite to the one you have drawn. Long term trends do not break down and immediately roll back down to earth especially a monthly trend.
If I add some fundamentals of where global CB are doing to the monetary system, you can see the big fundies are comfortable to buy safety ie USTB , Bunds, JGB all with very deep market liquidity. JGB/Bunds have no positive yields so what is the difference between those "commercial" paper and a physical PM? CDO was once treated better than gold, solid bond like feature with a VaR maths stamp and major rating agencies (3 of them) rated them AAA. It does not get better than that!
Sure the froth in that exponential rise in gold was taken off their valuation and now making another comeback. Meanwhile CDO was absorbed into TARP program, don't quote me on this or left frozen in time until global growth come back into the equation. Buying bullion relatively speaking will have very little cost of holding if you consider negative bond yields so maybe the flow of bond money will find a home in physical?
