Popular beliefs propelled gold to unjustifiably high prices, says Duke University professor Campbell Harvey, who co-wrote “The Golden Dilemma.” Campbell says the arguments to own gold do not hold up to scientific scrutiny and the “real” price of gold is still far below market levels.
Here's a lot of loose talk about gold -- stories that are told the vocal. And it was my idea. To actually. Scientifically investigate some of these stories. The crime story. Has to do with the -- Being a good inflation hedge. Terms of the goal is not an effective and inflation it with a terrible inflation hedge. -- is still volatile. And inflation. Doesn't have the same volatility. That once you start trying to hedge inflation -- It's gonna fail unless you -- investment holding period this theory law. I'm talking not years and talking centuries. Literally centuries. So in order to get that inflation ahead king ability. It's basically impractical -- most investors that was first meant that we dispel. We often hear well. Gold could protect you and a disaster scenario. So we took this quite seriously and we looked at a number of hyper inflation it's Brazil. -- hyper inflation from 1980 to 2000. -- years of hyper inflation what if you converted her portfolio of Brazilian currency. In 1982 gold. And then held it for twenty years. So it turns out that. If you -- seat held the currency -- basically lost everything. But if you -- gold. He would've lost 70%. 70%. Of your well. Was this a good hedge well is better than losing everything. But this seems a lot more logical to hold US dollars. There's a story -- told that. -- real interest rates are low. Then -- person who. And you look at the data appearance at four relation there. But I think that what's really going on is the economic environment so if you've got to challenged economic environment. That's leading to low interest rates the challenge economic environment is also leading people to. -- -- -- As as some sort of have -- -- -- each eats the economic environment that is causing the fluctuations in the price of gold. The real personable pretty simple to calculate take whatever the current crisis in divided by. Inflation level. And you get a ratio. And over time over a long. Period we noticed that ratio was about 3.2. Even with the the decrease in price the dramatic decrease -- price that we saw. Recently who goal that ratio is six. So it's still. Way above the long term average. If bull comes back to its long term. Average. Then the price falsely hundred dollars you're still way above the historical behavior. --