Tuesday, September 20, 2011

Gold vs. The Adjusted Monetary Base

Created this using data obtained from Kitco regarding the yearly gold price, and the Adjusted Monetary Base from the St. Louis Fed.  Unfortunately I don't have longer term data to work with, but the general point is that the historical average ratio implies a gold price at $2,000 per once, and a parity price implies ~$2,700 per ounce.  It is currently hovering around $1,800 per ounce, implying that gold is still trading at a discount in US dollar terms.