How Much Is Gold Worth? (Revised and Updated)
The comments below are an edited and abridged synopsis of an article by Kelsey Williams
Everyone has an opinion as to what something is worth, whether it is their home, a pocket watch, or a specific stock.
Sometimes these estimates are based on fundamentals, and sometimes on technical factors. But the combination of opinions and expectations, plus other factors that may affect the price, provide an indication of current value for the item in question.
If you believe gold is money, your opinion might be different than someone who sees gold as an investment, or someone who deems gold to have no useful value.
In simple terms, money is worth whatever it can be exchanged for (its purchasing power), so gold, or any other money, is worth what we can buy with it.
How do we know that our gold/money is realistically priced? With gold currently around $1,700, its value today is what we can buy with that amount.
Is $1,700 an accurate reflection of gold’s purchasing power? Can we expect that price to rise or decline to a degree that would influence a choice to hold money in gold vs. US dollars?
Gold is worth somewhere between $1,700.00 and $2,000 per oz at the moment. That may seem like a broad range for price-conscious investors, but it is consistent with gold’s price action historically.
That price reflects a loss of 98.8% in US-dollar purchasing power. The dollar is the only barometer you need to watch. The elements of surprise and timing are critical, especially in the short term.
Items for consideration that could have an effect on the dollar include: Unexpected actions by the Fed; accelerated or delayed effects of inflation previously created by the Fed; complete repudiation of the dollar as reserve currency; a credit implosion; and the Fed’s reaction to a credit implosion.