Monday, April 15, 2013
Why is Gold and Silver pulling back? Whats next?
gold overshot the inflation. In 1980 there was a month where we could have gone back on the gold standard. Take the price of gold X's all the ounces of gold and it covered the currency supply. Right now in dollars gold only covers about 7.3 Trillion. Its not different this time that's the point, gold has done this over and over throughout history. Gold is the benchmark to measure value and paper currencies; you are using paper currencies as a benchmark for gold.
David covers the reasons behind the major pullback in metals on April 12 and where they may go from here I measure "true value" in traditional purchasing power, which can be observed throughout a 100 years of $300 - $800 when adjusted to inflation. Using such a formula, the current expansion of currency and inflation is already included in determining where Gold should be priced at. If there were a bank holiday tomorrow, and the USD lost half it's value, an inflation graph would show little to no fluctuation. The historic value would simply change to $600 - $1,600, in post-holiday dollars.