PT  - JOURNAL ARTICLE
AU  - Claude B. Erb
AU  - Campbell R. Harvey
TI  - The Golden Constant
AID  - 10.3905/joi.2017.26.1.094
DP  - 2017 Feb 28
TA  - The Journal of Investing
PG  - 94--100
VI  - 26
IP  - 1
4099  - https://pm-research.com/content/26/1/94.short
4100  - https://pm-research.com/content/26/1/94.full
AB  - In The Golden Dilemma, Erb and Harvey explored the possible relation between the real, inflation-adjusted price of gold and future real gold returns. This update suggests that the real return of gold over the next 10 years could be about –4% per year if the real price of gold mean reverts, or –12% per year if the real price of gold overshoots and declines to previous low, real price levels. This view reflects a golden constant hypothesis that inflation is the fundamental driver of the price of gold. Of course, it is possible to entertain other hypotheses. A golden constant perspective suggests a fair value price for gold of $840 per ounce and a possible overshoot price of $353 per ounce.TOPICS: Commodities, wealth management