Financial history doesn't repeat itself, but it often rhymes. You can't be stupid enough to trade off anything I say.... I'm lucky they let me out of the straight-jacket long enough to trade.

J. P. Morgan

"Sell down to your sleeping point"

Tuesday, March 9, 2010

1980's price distributions for Gold

It's hard to take the 1980 gold price, and make that one data point, into an argument about "normalized Gold Price". There was a Jan spike and it was $850
But if I do a rough linear regression(I didn't run the numbers), even if you do, a regression of the price from Jan of 1980, you get $675, and not $850, and what is that 30% off the "peak", Any broader look at distributions in Gold price, are more in the $400 range, than they are in the $800 range.

The argument is this.

The inflation-adjusted price of gold in Jan, 1980 was $2300 of today’s dollars. We are now 50% below that peak.

But if you are talking about half that price, or even $500 as a peak Average price, which gold averaged for 2 years. it's .6 of the peak, which would give you $1380 as an average price, You are still within, 20% of that price. and if you liken $400 to current prices, you are well within the model, with a current price of $1150. Matching the $400 1980 price.

And all of that assumes that "This time" will mirror, last time, in your Socio-Economic Pricing model.

All of this, out of something that, they continue to find more of, and that is not consumed.

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