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James Turk: Is gold overvalued?
By James Turk
Free Gold Money Report
Tuesday, August 20, 2024
Gold may seem overvalued because of the recent record highs in its 6-decade ascent from $35 to $2500, but prices -- like appearances -- can be deceiving. What’s more, the value of any asset is more important than its price.
Price and value are too often conflated, which is a mistake. An asset’s price and the usefulness that determines its value are different sets of information that need to be viewed separately, but interrelatedly because price communicates an asset’s value. The undervaluation or overvaluation of anything are seminal circumstances that enable the informed observer to gain wealth because assets inevitably return to fair value.
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Home prices provide a good example of the difference between price and value. Using the popular Case-Shiller Home Price Index, a home priced at $165,000 10 years ago is now being priced at $323,000. Nevertheless, the home did not increase in value. It is the same house providing the same usefulness (shelter) it did a decade ago. Only its price has changed.
Gold -- measured by the U.S. dollar and the world's other major currencies -- closed at a new record high. Nevertheless, based on my objective calculation, gold is undervalued. We can expect new records will be achieved as gold's usefulness and undervaluation are recognized by ever more people, repeating what happened to it in the 1970s and many other occasions throughout monetary history. ...
... For the remainder of the analysis:
https://www.fgmr.com/is-gold-overvalued/
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