How to Value Gold

Barry Ritholtz posts a chart from Albert Edwards of SocGen which tries to show if gold is overvalued or undervalued. This chart reiterates the point I’ve made before that I’ve never seen a set of variables that closely tracks the price of gold.
I don’t see how useful a valuation metric is when the price is often one-fifth of where it should be.
One of Barry’s commentors sums it up well:

Let me get this straight… Gold has been ‘inexpensive’ for for roughly 38 out of the past 40 years, and is now near a record low?

Posted by on December 1st, 2009 at 12:41 pm


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