Cassiar Gold Corp. (TSXV: GLDC, OTCQX: CGLCF)
Revitalizing the Cassiar Gold District in British Columbia, Canada
When examining gold prices in isolation, some observers may speculate that there is a bubble in the gold market, but this is far from the truth.
After forming a cup-shaped bullish pattern, gold finally achieved its target price of $3,000 per ounce last week. While this psychological milestone could prompt a short-term technical correction, it’s important to note that price targets merely represent intermediate goals, as bull markets are never straightforward or linear.
Since 2011, the gold-to-S&P 500 ratio has been in significant decline. This reveals a fundamental reality of the markets: the true beneficiaries of the Federal Reserve’s quantitative easing policies have been U.S. stocks, not gold.
Moreover, the gold-to-monetary base ratio paints an even clearer picture, showing that the real bubble resides in the monetary base—or, in other words, the bubble lies within monetary and fiscal policies themselves. The stock market has simply been the largest beneficiary of this monetary expansion, resulting in structural overvaluation.
In contrast, gold’s valuation recovery is only in its early stages. As the global macroeconomic environment shifts into a new cycle of “policy toolbox exhaustion,” traditional methods of rescuing asset markets through monetary easing may fail, creating a historic opportunity for gold to undergo a long-term reassessment of its value.
The previous gold bull market ended when the gold-to-monetary base ratio surged past 4.8. Currently, this ratio sits at a much lower level of 0.35. Even if the ratio remains unchanged, the continued expansion of the monetary base provides significant potential for nominal gold prices to rise considerably.
This structural reconfiguration of the asset pricing system, driven by a breakdown in monetary policy dynamics, is cementing gold’s role as the ultimate store of value in history.
