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Theoretical price of gold (1983 - 2009)

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 since 1988 the Theoretical Gold price has vastly exceeded the Actual due to the low core inflation, low interest rate enviorment we have experienced over this period. A more thorough explanation of this concept can be read in the following article: Every Asset has a Fair Value.

 
   
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