Hi Ron, your article is very informative but I would more agree with David’s point of view.
Post the gold standard was scrapped the gold should be viewed as any other asset class like real estate, equities, fixed income, cocoa, pork etc. and strictly not as a standard scale to the monetary base because the “the gold standard has been scrapped” and this is the fact, however, due to a long period of time it was acting as a standard scale to monetary base and people have very much psychologically not been able to give it up as a standard and it might take some more time before the mass realizes this. If we look at gold as any other asset class and not as a scale to monetary base the current valuations can not be justified by any means. In an economy where the money supply is increasing in tandem with the domestic production and the inflation is under check the inflation adjusted return on capital could be handsome. However if we go by the gold standard theory one should hold on to gold because “monetary debasement is happening”. The real measure of monetary debasement is inflation and the scale is not gold but the over all price adjusted production and the increase in money supply in a period. Any asset which can beat this debasement is a suitable investment and as long as gold has a notion attached with it of being the ideal scale it may continue to move up, but that’s not a rational investment decision but an investment decision based on fear and dogmatism.