Has Gold Gotten Too Expensive?

10/15/20 08:41AM EDT

The guest commentary below was written by Jesse Felder of The Felder Report. This piece does not necessarily reflect the opinion of Hedgeye.

Has Gold Gotten Too Expensive? - gold cartoon 09.14.2016  1

With the gold price up about 100% since it bottomed five years ago, some investors seem to believe that it has gotten overpriced.

In addition to watching important drivers of the gold price, one way to look at its valuation is to simply compare it to popular alternatives.

The gold price relative to the Dow Jones Industrial Average would seem to suggest it is not expensive at all.

In fact, to match the valuation peak it reached about a decade ago, gold would need to double again from its current price.

Of course, that would still leave it far below the peak seen four decades ago. So gold’s upside potential over the long run looks far from exhausted even after its terrific run over the past few years.

Has Gold Gotten Too Expensive? - Screen Shot 2020 10 13 at 11.36.50 AM

EDITOR'S NOTE

This is a Hedgeye Guest Contributor piece written by Jesse Felder and reposted from The Felder Report blog. Felder has been managing money for over 20 years. He began his professional career at Bear, Stearns & Co. and later co-founded a multi-billion-dollar hedge fund firm headquartered in Santa Monica, California. Today he lives in Bend, Oregon and publishes The Felder Report. This piece does not necessarily reflect the opinion of Hedgeye.

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