To calculate the fair price of gold we assume that central banks need 20%-40% gold backing. Let's be conservative and use 20% gold backing.
The amount of gold that central banks hold today is $1.304 trillion.
The global base money supply is around $22 trillion today. (There are people who use M1, but I'm conservative and use base money M0)
To back this money supply by 20%, we need $22 trillion x 20% = $4.4 trillion.
This means that gold will need to rise in price from $1.304 trillion to 4.4 trillion.
Or 4.4/1.304 = 3.4 times.
This gives a fair gold price of 3.4 * $2000/ounce = $6800/ounce
The amount of gold that central banks hold today is $1.304 trillion.
The global base money supply is around $22 trillion today. (There are people who use M1, but I'm conservative and use base money M0)
To back this money supply by 20%, we need $22 trillion x 20% = $4.4 trillion.
This means that gold will need to rise in price from $1.304 trillion to 4.4 trillion.
Or 4.4/1.304 = 3.4 times.
This gives a fair gold price of 3.4 * $2000/ounce = $6800/ounce
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