The US “privilege” will erode over time, until it eventually fades. Global investors, irritated by uncertainty, won’t abandon the dollar, but they’ll search for alternatives. Even the Roman Empire didn’t collapse with a bang; its decline was a slow, inevitable process. The Romans themselves hardly noticed it.
Great article. I don't know if Gold will reach $16,000, but it will certainly go much higher.
Here is the situation: Global debt now exceeds Global GDP. It is the same situation in the US. Historically, countries "fixed" that situation through periods of sustained inflation (some hidden, some obvious).
More money with essentially the same amount of Gold means higher gold prices in dollar terms.
$16,000 per oz seems extremely high, but so would the current gold price (around $3,200) look to anyone from the year 2000 (around $280 per oz) or from the year 1971 (around $38 per oz).
Regarding the S&P 500 to gold ratio, a gold bug friend has shared that with me previously. The implication is that there exists a long term constant central value around which the ratio oscillates, and eventually it will regress to the mean. I dispute the assumption. Long term data shows that stocks grow at a faster rate than gold, over periods of generations and centuries. There is a statistically significant trend in the data in the chart, which translates to gradual exponential growth in the ratio.
I do not dispute that stocks are overvalued by their own metrics (PE, PB, PS), and gold should grow due to spiraling debt. I do not expect the stocks to gold ratio to return to earlier values, however.
Your analysis makes perfect sense and you explain it well.
Thanks
I’d be happy with $8,000us/oz. I bought at $2500.
I see your simple logical extrapolation and can agree with it.
But I temper those giddy figures with the thought of the rest of the world.
At $16K/oz much of what we use and do will become unaffordable.
I reckon there will be other factors to reign in US debt.
The US “privilege” will erode over time, until it eventually fades. Global investors, irritated by uncertainty, won’t abandon the dollar, but they’ll search for alternatives. Even the Roman Empire didn’t collapse with a bang; its decline was a slow, inevitable process. The Romans themselves hardly noticed it.
Great article. I don't know if Gold will reach $16,000, but it will certainly go much higher.
Here is the situation: Global debt now exceeds Global GDP. It is the same situation in the US. Historically, countries "fixed" that situation through periods of sustained inflation (some hidden, some obvious).
More money with essentially the same amount of Gold means higher gold prices in dollar terms.
$16,000 per oz seems extremely high, but so would the current gold price (around $3,200) look to anyone from the year 2000 (around $280 per oz) or from the year 1971 (around $38 per oz).
💯👍🏻 nice work!
Regarding the S&P 500 to gold ratio, a gold bug friend has shared that with me previously. The implication is that there exists a long term constant central value around which the ratio oscillates, and eventually it will regress to the mean. I dispute the assumption. Long term data shows that stocks grow at a faster rate than gold, over periods of generations and centuries. There is a statistically significant trend in the data in the chart, which translates to gradual exponential growth in the ratio.
I do not dispute that stocks are overvalued by their own metrics (PE, PB, PS), and gold should grow due to spiraling debt. I do not expect the stocks to gold ratio to return to earlier values, however.