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Eight Reasons Why Gold Is Still Cheap

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Despite the recent price correction, none of these things has changed. US deficits are still a major headache, and oil is still pumping the inflation primer. In the US producer price inflation for finished goods [goods leaving the factory gates] rose substantially (0.9%) in April for the second consecutive month (now at 4% per annum). Who said inflation was dead?

In summary, no matter what price corrections occur in the short term, my eight fundamental reasons for a bullish outlook on gold remain firmly in place.

The gold price is cheap relative to other commodities

The gold Price is cheap relative to equities

Gold is cheap relative to inflation

Gold has value relative to interest rates

Gold is cheap relative to asset-allocation possibilities

Gold is cheap relative to its supply / demand fundamentals

Gold is cheap when considering the China factor

Gold is cheap relative to the volatile geo-political environment


Like some of us here on HPC I'm a firm believer that this is a pretty accrate description of the Gold market and that the recent dip should be seen as a buying opportunity before things even more pear shaped in other markets.

I can only see the dollar devaluing and demand increasing from China/India in the near future. All the possible actions which could have been taken to stabalise the economy in the US haven't been and the strengthening of the Yuan will soon increase labour and raw material costs - both impacting inflation for much of the Western world.

Dr. Bubb - would really like any input you have on this if you have a moment.

- Pye

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  • 302 Brexit, House prices and Summer 2020

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      • down 5% +
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