The Phaserl


In Gold We Trust – From Aurophobia To Valuation

from Zero Hedge:

While there may be a few valid reasons for the recent bearish trend, some of which the following comprehensive report dissects; the bet remains that it is very likely undergoing a large degree correction in a secular bull market. The ‘In Gold We Trust’ report is a must-read from someone who truly understands how the gold market works in terms of price formation and how it should therefore be analyzed. From gold’s high stock-to-flow ratio (which is precisely what gives it its importance as a monetary asset – and is a major reason why it was chosen as money, i.e., the general medium of exchange, in times past, before governments imposed fiat money) to financial repression’s characteristics (a polar opposite of the relatively mobile wealth, that nevertheless exists physically in precious metals), the report also covers ‘aurophobia’ and its psychological roots. With the current collapse in prices, perhaps it is the attempt to approach the valuation of gold from a quantitative standpoint that is most interesting – on a relative-value basis – highlighting how moderately valued gold still is when looked at in this manner in spite of the advance since 1999/2000. “Even though the consensus is convinced that the gold bull market has ended, we remain firmly of the opinion that the fundamental argument in favor of gold remains intact. There exists no back-test for the current financial era. Never before have such enormous monetary policy experiments taken place on a global basis. If there ever was a need formonetary insurance, it is today.”

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