I personally agree that Gold the Most Undervalued precious metal in the Market right now. For those who want to know more about the facts about the value of gold vs dollars, here are the links. Just facts, no speculations.
Also, read “The Generational Storm – What You Need to Know about America’s Economic Future” by Kotlikoff and Burns.
“Today, U.S. interest rates are near historic lows, real return are low to negative, and we are exporting record quantities of dollars. Our trade deficit is running 500 billion annual rate. We have a trade deficit with the European Union that’s running at a 100 billion rate. 150 billion rate with China, 77 billion rate with Japan. All three areas import the bulk of their energy, which is priced in dollars.
In the late 1970s, as petrodollaRs piled up in Saudis Arabia and inflation headed for double-digit rates in the U.S., the Saudis made noises about seeking a more secure currency. Nothing happened because there was no place to go. The euro didn’t exist. The yen was seen as not quite big enough to replace the dollar. China was still communist… Basically, there was no alternative to the dollar. That’s one of the reasons the price of gold soared, peaking at $800 per ounce in 1980. Gold is the currency without a government. Given the dismal history of government aroundthe world, many think this quality makes gold superior to any paper currency. Others simply wish for a government willing to backits paper with something more substantial than… more paper.
Divide the amount of U.S. currency in circulation in 1980 by U.S. gold reserves, and you will find that a gold-backed dollar would require gold to be priced at $800 per ounce.
Do the same math today,and U.S. gold reserve would have to be worth about $4,600 per ounce for us to have gold-backed currency. That’s nearly 12 times the current market price of gold.
Is that the true value of gold? We don’t know. Besides that’s the wrong question. The important question is the reverse: WHAT IS THE TRUE OF THE DOLLAR?”
