Yes, I know, Gold is impossible to value, too many factors involved, too complex…. Yadda, yadda, yadda…..
Well, without too much time, stress, or serious thought, I feel pretty good about having completed a fairly reasonable valuation of Gold. I could write on the topic for days and days, but am not really properly incentivezed to do so~
However, I will explain my methodology. I took gold prices from the most recent economically stable time period (before gold went vertical) and compounded it by a “gold inflation rate” equal to actual US inflation + increase in US money supply as these were the 2 clear catalysts for increasing gold prices over the past decade. I then tacked on a fear premium which ranged from 0-2% per year (just to keep the gold bugs happy), and completed a monte carlo simulation on this number since it was the only assumption used. My results show a mean price for gold of $988 and a 90% probability that the fair value of gold according to my methodology rests between $922 and $1058.
And then there is the macroeconomic view of gold, which is absolutely horrible, but I will let the economists out there cover this area.
In other words, gold likely still has another 10% to 20% to fall before a bottom can even somewhat rationally be discussed.