Is Gold Expensive Yet ?

Gold’s Position in the Market

Gold has always been seen as a safe haven for investors, especially during times of uncertainty. However, recent data shows that gold might be lagging behind where it should be in terms of value. Over the years, several factors have influenced the price of gold, but when we look closely, gold seems to be significantly underpriced when compared to other financial metrics.

Historical Peaks of Gold Prices

Gold has had three significant peaks in its history: in 1980, 2011, and now in 2024. Back in 1980, gold hit $835 per ounce, and by 2011, it rose to $1,900, marking a 128% increase. In 2024, gold is currently around $2,719, which is a 43% rise from 2011. While these numbers may seem impressive, they don’t reflect the true potential value of gold when considering other financial indicators.

Money Supply vs. Gold’s Growth

One of the most important factors to consider when analyzing gold’s price is the expansion of the monetary base. Since 1980, the monetary base has increased by 3,500%, yet gold has only increased by 226% in the same period. This disparity suggests that gold should have tracked the rise in the money supply more closely. If it had, gold’s price could have been much higher today, possibly even reaching $10,000 per ounce.

Comparing Gold to Other Assets

When we compare gold to other financial metrics, the underperformance becomes even clearer. For example, the M3 money supply has gone up by 1,300%, federal debt has increased by 4,000%, and the S&P 500 has risen by 5,100%. Meanwhile, gold’s growth of just 226% over the last 44 years seems small in comparison. Even median house prices have gone up by 540%, which again highlights how much gold is lagging.

Gold’s Potential for the Future

With central banks around the world buying gold at record levels, there is growing awareness that gold is an essential part of any investment portfolio. Many funds and institutions that previously had no exposure to gold are now starting to consider adding it to their assets. This rising demand could push gold prices much higher in the future, as more investors and institutions buy in.

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