If politicians and central bank governors had studied history, they would know that gold should never be sold.
It has been 24 years since entering the 21st century, and the price of gold has increased 11 times in dollar terms, with the price also rising 11 times when calculated in many other currencies over the same period.
From 2001 to 2011, the price of gold rose 8 times without a single year of decline. Then, from a peak of $1,920 in 2011, it dropped to $1,046 in 2016, entering a proper three-year adjustment phase.
Since 2016, gold has been on the rise for 9 years, including a three-year period of sideways movement.
Over the past 24 years, gold has experienced an incredibly strong bull market. Despite this, only 0.5% of global financial assets are invested in gold. The proportion of gold in global assets has risen from 0.2% in 2001 to today’s 0.5%.
For most of the 2000s, the stock market experienced a similar bull market, and no investors fled the stock market. Nevertheless, gold has still vastly outperformed stocks in this century.
In the past 24 years, the S&P 500 index (with dividends reinvested) has increased by 572%. In the same period, gold has risen by 990%, with much lower volatility. Owning gold is like a hidden, well-protected secret. Few people, even professional investors, know that gold has risen by 1,000% or 11 times this century.
Historically, only 201,000 tons of gold have been produced. All of this gold is believed to still exist, although some may be on the ocean floor and some forever hidden. Less than half, specifically 93,000 tons, has been used for jewelry. However, a very important number emerges: only $3.6 trillion of private funds are invested in gold.
When we compare this figure with the largest companies in the U.S., only Nvidia has a market value of $3.5 trillion, and Apple is similar. Even more shocking is that all the gold held by global central banks is only worth $3.1 trillion, which is equivalent to Microsoft’s market value.
The total market capitalization of the top 10 companies in the U.S. is $19.2 trillion. Based on current prices, all the gold produced historically is worth $17 trillion today, which is more than $2 trillion less than the total value of the top 10 U.S. stocks.
When the valuation of all the central banks’ gold in the world matches the price of a large American company, we know this is absurd. The stock market is currently overvalued. The reasons for the accelerating gold prices are as follows:
