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Time to Admit That Gold Peaked in 2011?

Have you seen this “real price of gold” chart that’s been making waves? Among other things, it purports to show the gold price adjusted for inflation over the past 223 years. Notice the 1980 vs. 2011 levels.

The chart makes it seem that on an inflation-adjusted basis, gold has matched its 1980 peak in 2011, or nearly so. A mainstream analyst who still thinks of gold as a “barbarous relic,” a government official who doesn’t want people to think of gold as money, or an Internet blogger looking for some attention might try to convince you that this proves that the gold bull market is over, arguing that the 2011 peak of $1,921 is the equivalent of the 1970s mania peak of $850 in January of 1980.

The logic is flawed, however; even if it were true that gold has matched its 1980 peak in inflation-adjusted prices, it would not prove that the top is in this time. This is not the 1970s, the global economy is under very different pressures, and there’s no rational basis at all for saying the top this time has to be at the same or similar level as last time.
That’s even if it were true that gold has matched its 1980 peak—but it hasn’t.

There are, in fact, several more relevant questions for gold today:

  • What will happen with the unprecedented amount of money that’s been printed around the world since 2008?
  •  Why are economies still sluggish after the biggest monetary experiment in history?
  •  Global debt and “unfunded mandates” are at never-before-seen levels; how can this conceivably be paid off?
  •  Interest rates are at historically low levels—what happens when they start to rise?
  •  Regardless of your political affiliation, do you trust that government leaders have the ability and willingness to do what’s necessary to restore the economy to health?

If these issues were absent, maybe we’d change our position on precious metals. But until the word “healthy” can honestly be used to describe the fiscal, monetary, and economic state of our global civilization, gold should be held as an essential wealth-protection asset.
Today’s volatile world is exactly the kind of circumstance gold is best for.

The message here is clear, my friends. Regardless of the measure, gold has not matched its 1980 peak. And the reasons to own it have not faded. Indeed, they have grown. Continue to accumulate.

Source Casey Research

 

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