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Theoretical price of gold (1960 - 1982)

This chart looks at the growth rate of Australian money supply (M3) compared with the world average growth rates in above ground Gold inventory, to determine a monetary inflation adjusted price of Gold in terms of Australian dollars (Theoretical Gold Price - Red). A comparison is made with the Actual Australian dollar Gold price (Blue). We can see that in the high inflation period of 1970's and early 80's the Actual Gold price has exceeded the Theoretical as people's confidence in fiat money has come under question. See a more thorough explanation of this concept in the following article: Every Asset has a Fair Value.

 
   
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