Proven wrong, academics take a 3rd stab at gold
They are back, ole’ Harvey and Erb. First there was the Golden Dilemma in 2012, where they predicted $800 for the gold price (it made a low of 1046 in 2015) based in part on its lack of effective inflation utility (well, they were at least half right, sort of).
Then came the Golden Constant as I highlighted in 2019. Again applying faulty assumptions from the rarefied air of academia, they state:
A “golden constant” perspective suggests a fair value price for gold of $840 an ounce and a possible overshoot price of $353 an ounce.
Mind you, this was produced during the very year that NFTRH clearly marked the beginning of the next bull phase as the gold price took out the “Bull Gateway” at 1378.
Twice wrong for the plucky professors. Yet somehow, the media have decided that they are worthy of feeding more assumptions to the public to digest. They are academics after all; experts, after all. Media serves experts, after all. And being right or wrong seems not to matter because once you’re codified in the pubic consciousness, you are all that. When you’re an unknown blogger or other such riff raff, you are none of that.
Now you can download a professionally produced research report by clicking the abstract. The article is so important, you see, that it needs an abstract to prepare you.
Within the research, Harvey & Erb are tripling down on the same premise, which was wrong 12 years ago, wrong 5 years ago and is wrong again today. In their insistence on tying gold to inflation (also mentioning lesser considerations like China buying, BRICS dedollarization, Central Bank buying and GLD bullion holdings) they ignore other more important utilities for gold and focus on its ‘price’ and what they think its ‘price’ should be. In other words, all the stuff you see out there leading the masses away from the real utility for gold, which is value. A plain and simple word ignored by most in the financial markets, media and apparently, academia.
Gold is simply the anti-bubble, the asset outside the official system accepting no liability, owing nobody, holding long-term value and sure, protecting against officially manufactured inflation within a Keynesian debt system (until that inflation begins to temporarily rig the economy positively), against economic down cycles and frankly, against the end of the bubble era.
The bottom line as relates to Harvey & Erb is that they have once again produced a piece with a lot of moving parts, a lot of noise, conjecture and firm assumptions, the primary of which is wrong. Today they are in essence saying that gold is vulnerable due to its high “real price” as it finally starts outpacing inflation signals, like those noted in yesterday’s article. Imagine that, the very thing that right minded gold bulls have been waiting for is now being touted as a means to gold’s price destruction.
