The rapid increase in the price of gold over the last decade has many believing that the end of the gold bull market is near. But those who are bearish on gold are failing to look at the fundamentals that drove the gold price upwards in the first place.
There is compelling evidence to suggest that the gold bull market is far from over, and that gold is still significantly undervalued.
Rather than looking at the nominal prices, Skoyles looks at comparisons against monetary aggregates and other asset classes (gold vs. M2 money supply; gold vs. MZM supply; gold vs. the S&P 500). This is key in gold price analysis, as it puts the price of the metal into perspective alongside fundamentals, which are heavily influenced by both monetary policy and confidence in the economy.
Skoyles also discusses why this gold bull is different than the previous one, and why the extremes of today are much greater than in the 1970s, currency imbalances especially.
Today’s gold bull remains strong because of a loss of confidence in the fiat currency system, and confidence is the only thing that backs such a system. Gold has responded to Fed assurances of further money printing and low interest rates as it should have—by going up in price and demonstrating its role as a safe haven.
Still, the gold price needs to be much higher to match 1980 levels, and the global situation is much worse today than it was then. A rising gold price is merely the monetary system resetting itself from a state of imbalance that is far greater than in the 1970s.
To read Jan Skoyles article: Gold Bull Bigger Than Ever
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