Erb, Claude B. and Harvey, Campbell R., Is There Still
a Golden Dilemma? (May 7, 2024). https://ssrn.com/abstract=4807895 or http://dx.doi.org/10.2139/ssrn.4807895
Abstract
The real, inflation-adjusted, price of gold is high.
Historically, a high real gold price has been associated with low
inflation-adjusted gold returns over the subsequent 10 years. Further,
historically the realized 10-year rate of inflation has had close to no impact
on realized 10-year nominal and real gold returns. An influx of investment in
gold (from gold-owning ETFs, Costco shoppers, “de-dollarizing” central banks
and possibly others) has seemingly doubled the real price of gold relative to
pre-influx times. Today’s golden dilemma is yesterday’s golden dilemma: has an
influx of gold buying ushered in a new age of permanently higher “this time is
different” real gold prices or is this simply the latest “wash, rinse, repeat”
cycle setting-up a significant fall in real gold prices?