Yesterday I showed you the inflation adjusted gold chart for the last 40 years.. It clearly proves beyond any doubt that gold is trading nowhere near historic highs.
GOLD trading at record highs therefore bound to fall?
One of the main bear arguments you’ll hear is that gold is bound to fall since it is trading at record highs these days. Yes, gold is trading far above its 1980 peak of $850 but you don’t have to be Einstein in order to understand that today’s dollars don’t possess the same purchasing power as 1980 dollars. So if we take a peek at the inflation adjusted chart for gold the pictures changes dramatically and proves beyond any doubt that gold is nowhere trading near record highs these days. In order to do so it should be trading above $2300+..(according to official government inflation data!)
Now when you take into account the REAL inflation number instead of the bogus government inflation numbers then the pictures changes even more to the extreme. In order to reach inflation adjusted highs when using inflation statistics reported at Shadow Government Statistics – Home Page then gold should hit $7000+ ..
Now here’s the gold chart in 2009 dollars using the alternate CPI data published by John Williams at Shadowstats.com:
Anyone looking at this chart will have a hard time defending the view that gold is a bubble about to burst!
Again, last week’s drop in price of gold means nothing in the BIG picture.. Gold will trade at new inflation adjusted highs before this bull market is over ($10.000 by 2015, see also related article ‘Last Chance to buy gold below $1000?’ published on Sept 02, 2009)
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