| Ripple Effect — May 7, 2025
When investing, we want to act like jurors in a civil trial. We can’t wait for 100% certainty – by then the investment opportunity has passed. So we look for a preponderance of evidence on one side.
In the gold market, incessant central bank buying, sticky inflation, and uncertainty of the policies of governments all point to further upside to gold, as we’ve written about for nearly a year now.
But one measure suggests gold is overbought. Specifically, the number of hours someone has to work to buy an ounce of the metal:  We can see that spikes higher in this cost tend to represent a peak in gold’s price. And that the current 90 hours of average earnings is right near prior peaks in 1980 and 2011.
Time will tell if this analysis is right, or if gold still has more room to run. Looking at those prior peaks, there was a much longer-lasting rally before peaking out.
In other words, if the preponderance of the evidence is right, most investors are about to get priced out of gold.
-Andrew P.S. As always, your cheerful reader feedback is welcome: feedback@greyswanfraternity.com (We read all emails. Thanks in advance for your contribution.)
How did we get here? Find out in these riveting reads: Demise of the Dollar, Financial Reckoning Day, and Empire of Debt — all three books are now available in their third post-pandemic editions. You might enjoy one or all three. 
(Or… simply pre-order Empire of Debt: We Came, We Saw, We Borrowed, now available at Amazon and Barnes & Noble or if you prefer one of these sites: Bookshop.org, Books-A-Million or Target.)
Please send your comments, reactions, opprobrium, vitriol and praise to: feedback@greyswanfraternity.com |
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