Why gold still looks cheap

After years of neglect, the dollar price of gold is hitting 28-year highs. Yet when you consider that the 'real' price of gold was as high as $5000 back in the early 80s, gold has much further to climb.

Since the end of April 2001, the US dollar price of a troy ounce of gold has risen from US$264 to US$747 as of October 1, 2007 (Fig. 1) (November 1 spot is $783); in that period, gold has even 'outperformed' the US stock market.

To put it in less pleasant terms: the exchange value of the US dollar vis--vis gold the world's ultimate, freely chosen means of payment has fallen considerably in the time span under review.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free
https://cdn.mos.cms.futurecdn.net/flexiimages/mw70aro6gl1676370748.jpg

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up
MoneyWeek

MoneyWeek is written by a team of experienced and award-winning journalists, plus expert columnists. As well as daily digital news and features, MoneyWeek also publishes a weekly magazine, covering investing and personal finance. From share tips, pensions, gold to practical investment tips - we provide a round-up to help you make money and keep it.