Market Analyst: Various Indicators Suggest Gold Is Over-Priced And Over-Valued

Technically speaking, whether we look at gold as a commodity or as a currency, it is over-priced and over-valued. Here are the details…

by West Glenn of WestPacific Market Analytics

There have been way too many opinions in the past month on where Gold is headed.

It has been a long time since I have written to the Doc.

One has to take a truly deep look in answering the one question that matters, and that question is ‘What is Gold Worth’?

How do we go about ‘seeing’ and ‘ understanding’ the answer to that question?  \

I do not and never have liked to talk too much, so let’s look at a few things for consideration.

After all, the answers rest in the models.

-Alan Greenspan once said ‘sometimes Gold trades like a commodity and other times it trades like a currency.’

How does one ‘value’ Gold?

Pricing Gold To Inflation

You can see that compared to the level of inflation, Gold is very; very overpriced.  This is the first thing we must look at since above all Gold is an inflation hedge first and foremost.  To price to my target we are still well above inflation as I do not see any for a few years yet into the future.

Pricing Gold To A Basket of Dollar Price Based Commodities

Next I want to price it to a basket of Dollar Based Commodities.  One can see that even at my price level, we are within the trading band historic, above the indicator price. 

So here we have treated Gold like a commodity, so now let’s treat it like a currency.

Pricing Gold To A Basket of  Currencies

Pricing to a basket of currencies and treating Gold like a currency today’s value is 1050.  The USD will continue to ramp higher pushing gold lower.  I expect this price point to work into that $820 Gold target late into 2020.

Pricing Gold To A Basket of Bonds

Pricing to a basket of global government bonds.  Gold tracks this better than any other price indicator.  Take note of the pink signal in the model, this is the PULSE Indicator.  Thus bonds have topped, and so has gold.

Pricing Gold To The Gold Premium or Discount Model

Gold could see a massive price collapse; crash like.

Pricing Gold Miners to The Internal Market Metrics Mode

Gold Miners will lead.

WestPacific Market Analytics

I write a weekly market technical newsletter and we provide daily updates on our Discord Member Site.  It tracks everything in markets, metals, energy, commodity, internal market metrics and so much more!

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Prepare for the market crash to come.  The ‘J’ top arrived last week!