Attempting to value gold

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sundarb's picture
sundarb
Status: Bronze Member (Offline)
Joined: Jan 10 2011
Posts: 72
Attempting to value gold

All,

I found an interesting set of videos by the founder of Bullionvault, trying to put a fair value on gold.

It is a very tricky business, but I think he did a decent job navigating through it and he came up with a fair value around 3800$.

He uses probability of inflation % in baskets and tries to filter the probability of that really happening into the price of gold.

http://gold.bullionvault.com/How/GoldValue/#MAREKK2

Another way to look at it may be using the Dow/gold ratio:

http://home.earthlink.net/~intelligentbear/com-dow-au.htm

At 13,000 for Dow, then the price of gold to match a long-term ratio of 3 would be around $4000 an ounce.

I was wondering if you had any thoughts on this analysis?

 

nameofthegame's picture
nameofthegame
Status: Member (Offline)
Joined: Sep 25 2012
Posts: 15
BullionVault is great but I

BullionVault is great but I think this is quite conservative a figure, even considering the article is over a year old when gold was around the $1,300 level if I remember right). And Peter Schiff and others have pointed out that the gold to Dow ratio would eventually get to nearer the 1:1 level before a correction does take place. Whether this means a Dow declining from 13,000 or whether gold and the Dow will meet somewhere beyond 13,000 is the mystery. I'd say above 13,000, but I might be thinking wishfully.

marktrading's picture
marktrading
Status: Member (Offline)
Joined: Nov 12 2012
Posts: 1
Hi i am  gold and silver

Hi i am  gold and silver trader and new in this forum.

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