Ron,

In your article you compare the size of the monetary base with the price of gold, which is a bit misleading since the data does not take into consideration the growth in the quantity of gold.

What would be more interesting to see is the comparison of quantity of gold vs. quantity of money. Dividing the monetary base by the quantity of gold in both the base year (1971) and the current year (2012) should give you a more accurate reading of the true price of gold. If my reasoning is correct, it will be lower than the quoted market price.

If so, the question would be: is gold overvalued?

Thanks for the article.