• 40 mins BP To Invest $200 Million In Solar
  • 2 hours Tesla Opens New Showroom In NYC
  • 3 hours Petrobras CEO Hints At New Partner In Oil-Rich Campos Basin
  • 5 hours Venezuela Sells Oil Refinery Stake To Cuba
  • 11 hours Tesla Is “Headed For A Brick Wall”
  • 16 hours Norwegian Pension Fund Set to Divest From Oil Sands and Coal Ventures
  • 20 hours IEA: “2018 Might Not Be Quite So Happy For OPEC Producers”
  • 21 hours Goldman Bullish On Oil Markets
  • 22 hours OPEC Member Nigeria To Issue Africa’s First Sovereign Green Bond
  • 1 day Nigeria To Spend $1B Of Oil Money Fighting Boko Haram
  • 1 day Syria Aims To Begin Offshore Gas Exploration In 2019
  • 1 day Australian Watchdog Blocks BP Fuel Station Acquisition
  • 1 day Colombia Boosts Oil & Gas Investment
  • 2 days Environmentalists Rev Up Anti-Keystone XL Angst Amongst Landowners
  • 2 days Venezuelan Default Swap Bonds At 19.25 Cents On The Dollar
  • 2 days Aramco On The Hunt For IPO Global Coordinators
  • 2 days ADNOC Distribution Jumps 16% At Market Debut In UAE
  • 2 days India Feels the Pinch As Oil Prices Rise
  • 2 days Aramco Announces $40 Billion Investment Program
  • 2 days Top Insurer Axa To Exit Oil Sands
  • 3 days API Reports Huge Crude Draw
  • 3 days Venezuela “Can’t Even Write A Check For $21.5M Dollars.”
  • 3 days EIA Lowers 2018 Oil Demand Growth Estimates By 40,000 Bpd
  • 3 days Trump Set To Open Atlantic Coast To Oil, Gas Drilling
  • 3 days Norway’s Oil And Gas Investment To Drop For Fourth Consecutive Year
  • 3 days Saudis Plan To Hike Gasoline Prices By 80% In January
  • 3 days Exxon To Start Reporting On Climate Change Effect
  • 4 days US Geological Survey To Reevaluate Bakken Oil Reserves
  • 4 days Brazil Cuts Local Content Requirements to Attract Oil Investors
  • 4 days Forties Pipeline Could Remain Shuttered For Weeks
  • 4 days Desjardins Ends Energy Loan Moratorium
  • 4 days ADNOC Distribution IPO Valuation Could Be Lesson For Aramco
  • 4 days Russia May Turn To Cryptocurrencies For Oil Trade
  • 4 days Iraq-Iran Oil Swap Deal To Run For 1 Year
  • 7 days Venezuelan Crude Exports To U.S. Fall To 15-year Lows
  • 7 days Mexico Blames Brazil For Failing Auction
  • 7 days Norway Allows Eni To Restart Goliat Oil Field In Barents Sea
  • 7 days Malaysia Suggests Muslim Countries Stop Trading Oil In U.S. Dollars
  • 7 days Kinder Morgan Wins Appeal To Start Trans Mountain Work
  • 7 days Mexico Cancels Deepwater JV Tender Due To Lack Of Interest

Breaking News:

BP To Invest $200 Million In Solar

Alt Text

Expect Mine Closures In This Key Gold Mining Nation

Major gold mining nation South…

Alt Text

Did These Mining Giants Just Confirm The Next Gold Frontier?

After Ecuador’s President removed a…

Alt Text

Can Mali Maintain Its Gold Mining Status?

Mali could be about to…

The Misguided Interpretation of Historical Gold Prices

The Misguided Interpretation of Historical Gold Prices

Gold bears are on the prowl again, having apparently recovered from their 10 year scorching, and it looks like some are launching a new counter-offensive.
Exhibit A:

The gold chart below was included in a recent post by John Ameriks of Vanguard. It shows gold prices over the last 139 years (1871-2010), adjusted for inflation.

Price of Gold

The intent behind these types of charts is clear. It makes gold look very bubbly indeed.

Mr. Ameriks furthers his bearish gold argument thusly:

Bottom line: Any value that gold has as an investment appears, historically, to have accrued to investors who had a position prior to certain episodes of economic or financial distress. And to generate truly eye-popping returns from a gold-based strategy, you’d have needed to be selling at the peaks of these past price spikes, not buying.

The basis for making an investment in gold now is a conviction that the worst is yet to come. I’m not saying it can’t happen. But looking at how far these prices have come already, and thinking about the kinds of truly disastrous events that are included in this 140-year period, I’m skeptical.

First off — Yes, of course the worst is yet to come. Have you heard about the state of state governments? The double dip is getting rolling, and QE 2.0 is right around the corner. For more on that see this must-read piece from DoctorHousing Bubble.
And regarding the use of long-term charts to predict future prices, it is folly. In 1472 the inflation adjusted price of silver is around $800/ounce.  Is it headed back there any time soon? No, though I would welcome the move.

Price of Silver

Adam Sharp
BearishNews.com
Originally posted here.




Back to homepage


Leave a comment
  • Anonymous on August 18 2010 said:
    The first gold chart does not make much sense. Before 1930, the US was on a gold standard which means that the Dollar price of gold could not have fluctuated before that time. Adjusting for inflation makes only sense after 1971 when the Dollar became a floating currency versus gold.

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News