My Take on the Gold Price Discussion

Recently, I have been having thoughts about gold, and how printing of more money would affect it. If we keep on printing money, it seems logical to me that gold prices should rise.

However, when I had a look into the historical trend of gold price movements, something came up.

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Gold hit $2,600 back in 1981; this is much higher than today’s value of approximately $2,300. If we are producing so much currency then shouldn’t the values of unique assets like gold be rising? That was my opinion and Patrick David's

I went into history books and discovered that in 1980, there occurred an enormous increase in the value of Gold from $35 to roughly $850. It fell again afterwards although never ever got as low as its starting point at $35. In the year 2000 it experienced very low rates at around $200 before beginning another bullish cycle.

Back in 2011, the price of gold had a significant rise to almost $1,900. Although for the last ten years the market has been generally stable.

Then why does not gold’s worth go up with all these money printing?*

In a debate between Peter Schiff and Patrick David, something that was worth noting was mentioned.

Peter believes that we could be at the start of another huge increase in the price of gold. He anticipates that ounces will range between $10,000 and $20,000 in value.

The basis for this is quite simple: much of inflation due to currency debasement has ended up here—stocks, bonds and real estate markets; however, it is now moving towards the actual economy and Gold for that matter.

To understand it better, Patrick compared how gold moved against Bitcoin and S&P 500. For the last few years, gold has not performed as well as these other assets have according to peter, but he explains that this is flawed reasoning. He also added that starting from 2000 until now; S&P 500 performed worse than gold did while in last two and a half years it even surpassed Bitcoin.

Next, we turned our attention to the average cost of a home in America. In 1981, at its peak, gold had an estimated worth of $69,000 per house on average. It is currently valued at around $400,000. For that reason homes are now cheaper than in 1981 once adjusted for inflation.

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According to what Peter said, there could be reasons why the prices of houses go up, such as government grants and that bigger houses are built today. Nevertheless, he still pondered over why gold was not keeping pace with other assets.

He made an interesting remark about the worthiness of currency. When Federal Reserve came into existence in 1913 an ounce of gold was worth $20 compared to more than $2,300 today indicating that the dollar has experienced great devaluation since then due to rising prices and money supply expansion.

Maybe it’s just taking its time to catch up to where it should be. So despite appearances, gold might not be as cheap as it looks like; Peter Schiff thinks that in twelve months’ time or so, gold prices will go through the roof and it won’t seem such under priced anymore

This discussion helped me to see things in a new light, making me realize that the world of finance is not always what it seems.

For a long time assets can be mispriced before they adjust to their true value. The market is like a voting machine in the short run and in the long run it is like a weighing machine, as Warren Buffett has said.

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However, given the complexities and uncertainties surrounding gold and its potential future trajectory, my advice to investors would be that they approach this with caution and patience.

While it may be very enticing, one must have a long-term perspective instead of reacting hastily to transient market changes.

So, yeah, while gold might not be shining brightly right now; it could be gearing up for something big sometime later. And when that happens I will definitely keep an eye on my investments.

Thanks for reading.

Here is a link to the entire discussion below:

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