Gold is now double its real long term average price. Sell.
Posted by John Reed on
From time to time, I calculate the long-term average price of gold. Notwithstanding idiots saying you can’t overpay for gold, you CAN overpay and you should not.
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The only measure I have come up with for telling when you are overpaying is the long-term real (adjusted for inflation) price. Below are the annual-end-of-year prices adjusted for inflation to 2024 dollars.
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As you can see, the long-term average, real (adjusted for inflation) price has been $1,131.68 since 1969. The current price is about double that. You should buy when a troy ounce of gold is BELOW that long-term average. Not now.
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The key basis for that advice is a statistical phenomenon called regression to the mean. Mean is the same as average. Regression means future prices will do the same as past prices, namely fluctuate between the low of $280.38 and the high of $2,255.61. Furthermore, the gold price plummets when the government repeals capital controls. Which it typically does after trying to get away with hyperinflation and failing. So if you are going to hedge against inflation with gold, you better be very sure you get out before they repeal capital controls. If you fail to do that, you could pay over $2,000 for your inflation hedge then see it fall to hundreds of dollars when inflation suddenly ends.
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year gold price 2024 price
2024 $2,063.75 $2,063.75
2023 $1,943.00 $1,965.68
2022 $1,801.87 $1,884.01
2021 $1,798.89 $2,002.29
2020 $1,773.73 $2,113.20
2019 $1,393.34 $1,682.62
2018 $1,268.93 $1,556.85
2017 $1,260.39 $1,682.62
2016 $1,251.92 $1,609.16
2015 $1,158.86 $1,520.45
2014 $1,266.06 $1,673.22
2013 $1,409.51 $1,876.89
2012 $1,668.86 $2,255.61
2011 $1,573.16 $2,163.28
2010 $1,226.66 $1,736.77
2009 $973.66 $1,399.18
2008 $872.37 $1,287.74
2007 $696.43 $1,028.97
2006 $604.34 $929.35
2005 $444.99 $701.69
2004 $409.53 $667.83
2003 $363.83 $612.62
2002 $310.08 $531.93
2001 $271.19 $476.27
2000 $279.29 $498.11
1999 $278.86 $514.19
1998 $294.12 $537.95
1997 $331.00 $636.81
1996 $387.73 $758.66
1995 $384.07 $776.46
1994 $384.16 $796.36
1993 $360.05 $766.34
1992 $343.87 $752.02
1991 $362.34 $815.40
1990 $383.73 $890.00
1989 $381.27 $981.89
1988 $436.78 $1,174.56
1987 $446.84 $1,201.61
1986 $368.20 $1,034.05
1985 $317.42 $901.22
1984 $360.65 $1,062.86
1983 $423.71 $1,298.01
1982 $376.11 $1,195.87
1981 $459.16 $1,515.84
1980 $614.75 $2,210.58
1979 $307.01 $1,242.15
1978 $193.57 $887.29
1977 $147.84 $738.79
1976 $124.80 $665.44
1975 $160.87 $899.50
1974 $158.76 $949.27
1973 $97.12 $899.50
1972 $58.17 $424.75
1971 $40.80 $308.06
1970 $35.96 $280.38
1969 $41.10 $338.31
average $1,131.68
.
The only measure I have come up with for telling when you are overpaying is the long-term real (adjusted for inflation) price. Below are the annual-end-of-year prices adjusted for inflation to 2024 dollars.
.
As you can see, the long-term average, real (adjusted for inflation) price has been $1,131.68 since 1969. The current price is about double that. You should buy when a troy ounce of gold is BELOW that long-term average. Not now.
.
The key basis for that advice is a statistical phenomenon called regression to the mean. Mean is the same as average. Regression means future prices will do the same as past prices, namely fluctuate between the low of $280.38 and the high of $2,255.61. Furthermore, the gold price plummets when the government repeals capital controls. Which it typically does after trying to get away with hyperinflation and failing. So if you are going to hedge against inflation with gold, you better be very sure you get out before they repeal capital controls. If you fail to do that, you could pay over $2,000 for your inflation hedge then see it fall to hundreds of dollars when inflation suddenly ends.
.
year gold price 2024 price
2024 $2,063.75 $2,063.75
2023 $1,943.00 $1,965.68
2022 $1,801.87 $1,884.01
2021 $1,798.89 $2,002.29
2020 $1,773.73 $2,113.20
2019 $1,393.34 $1,682.62
2018 $1,268.93 $1,556.85
2017 $1,260.39 $1,682.62
2016 $1,251.92 $1,609.16
2015 $1,158.86 $1,520.45
2014 $1,266.06 $1,673.22
2013 $1,409.51 $1,876.89
2012 $1,668.86 $2,255.61
2011 $1,573.16 $2,163.28
2010 $1,226.66 $1,736.77
2009 $973.66 $1,399.18
2008 $872.37 $1,287.74
2007 $696.43 $1,028.97
2006 $604.34 $929.35
2005 $444.99 $701.69
2004 $409.53 $667.83
2003 $363.83 $612.62
2002 $310.08 $531.93
2001 $271.19 $476.27
2000 $279.29 $498.11
1999 $278.86 $514.19
1998 $294.12 $537.95
1997 $331.00 $636.81
1996 $387.73 $758.66
1995 $384.07 $776.46
1994 $384.16 $796.36
1993 $360.05 $766.34
1992 $343.87 $752.02
1991 $362.34 $815.40
1990 $383.73 $890.00
1989 $381.27 $981.89
1988 $436.78 $1,174.56
1987 $446.84 $1,201.61
1986 $368.20 $1,034.05
1985 $317.42 $901.22
1984 $360.65 $1,062.86
1983 $423.71 $1,298.01
1982 $376.11 $1,195.87
1981 $459.16 $1,515.84
1980 $614.75 $2,210.58
1979 $307.01 $1,242.15
1978 $193.57 $887.29
1977 $147.84 $738.79
1976 $124.80 $665.44
1975 $160.87 $899.50
1974 $158.76 $949.27
1973 $97.12 $899.50
1972 $58.17 $424.75
1971 $40.80 $308.06
1970 $35.96 $280.38
1969 $41.10 $338.31
average $1,131.68
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