The Gold Money Index and gold's fair value | Gold Price News
Any reasonable saver who has seen the virtue of accumulating gold
should be asking himself the crucial and necessary question of when to
part with their gold, or at least when to reduce his allocation to
precious metals. As with any other asset, the answer is simple: when it
becomes overvalued.
Valuing gold however is no easy task. Most portfolio managers and
investors don’t even try, or attempt to mistakenly apply to gold the
same models used for commodities, ignoring gold’s 65-1 stock-flow ratio
which sets it apart from most commodities, at least as far as the impact
of annual production on supply is concerned. Gold has no yield, no
credit rating and no P/E ratio. The correct way to value gold, as we’ve
argued before, is to compare it to other currencies.
That is precisely what James Turk’s Gold Money Index
does. It pinpoints the exact historical points at which gold has been
in a bubble and definitely overvalued, thus proving the perfect tool to
answer that pressing question: when do I sell my gold?
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