Stefan brings up a recurring topic of discussion here at FOFOA. He asks, "How could gold ever be worth more than $10,000 in today's dollars?" And I reply, "How could it not?"
Then again, look at what we're arguing over. As Michael Maloney said, It'll either be breathtakingly spectacular or stunning, one or the other.
Stefan Pernar said...
Have been doing a bit of math:
Total world wealth in 2007 in 2000 US$ = 125.25 Trillion 
Equivalent 2010 dollars = 125.25 TUS$ * 1.25  = 156.56 TUS$
Total above ground gold = 158'000 metric tons 
Theoretical maximum gold value assuming ALL wealth flows into gold = 156.56 TUS$ / 158'000 tons = 30'816.55 USD / oz
Comments: this assumes that all the value of all other assets (silver, commodities, stocks, gems, houses, currency, land, etc) drops to zero. Assuming that only half the value of all other assets flows to gold then we are looking at a rationally defensible 15'000 USD / oz in 2010 dollars.
Considering that since 2007 total wealth dropped significantly due to the stock market correction this figure will have to be corrected downward 25% again. So we are looking at a realist maximum 2010 dollar gold price of around 10'000 USD / oz.
Projecting a 50'000 2010 USD gold price assumes world gold wealth alone (50'000 USD / oz x 158'000 tons of gold = 254 TUS$) eclipsing total 2007 world wealth (all assets) by about 2/3.
Conclusion: A future gold price of 50'000 USD / oz in 2010 dollars without an accompanying global total wealth increase by about an order of magnitude is grossly unrealistic.
 Estimating the Level and Distribution of Global Household Wealth, United Nations University, 2007
June 18, 2010 7:58 PM
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