The Massive Collapse Of Gold May Have Just Begun.

According to the formula in the study of Erb and Harvey, the fair value of gold now is about 825 dollars, which is equivalent to the current gold price falling by 25%.

Gold prices are likely to plummet to $350 / ounce before returning to fair value.

Falling to such a low level means that gold prices will plummet by 80% from its peak in 2011.

It is reported that the massive collapse of gold may have just begun.

A famous gold forecaster predicted that

It will drop to $350 / ounce.

You know, since 2003, the price of gold has never dropped to such a low level.

Obviously, this price is much lower than that of most experts.

However, Claude Erb's prediction may be worth paying attention to.

Campbell Harvey, a former commodity manager of TCW group, once pointed out in a report issued by Duke University finance professor in 2012 that gold will have a long bear market.

At that time, gold prices just started to fall.

He pointed out that the volatility of gold is not comparable.

Or many other things, no less than them.

This precious metal may be overvalued.

In fact, gold has been overvalued and has a large margin now. "

Worse still, gold is likely to collapse further.

According to the formula in the study of Erb and Harvey, the fair value of gold now is about 825 dollars, which is equivalent to the current gold price falling by 25%.

However, before returning to fair value, gold prices usually fluctuate wildly.

Like the price of stocks and bonds, the price of gold will be influenced by investors' over optimism or excessive pessimism.

Their research shows that gold prices are likely to plummet to $350 / ounce before returning to fair value.

Falling to such a low level means that gold prices will plummet by 80% from its peak in 2011.

For investors, this is clearly a huge loss.

It is regarded as an inflation hedge.

In fact, the debate over whether gold is a good investment has never ceased, and criticism of its failure to return has been heard all the time.

But when it comes to hedging, gold is undoubtedly the first choice.

The study of Erb and Harvey is not specific.

Even if their views are correct, gold is overvalued, and no one can say when the price will be amended.

Gold prices may rise to a higher level before the reversal.

In the past, the "peak to trough" cycle of gold prices lasted for 20 years.

It should be emphasized that not everyone agrees with the view of Erb.

Bob Alderman, director of wealth management at Gold Bullion International, pointed out that "gold and the dollar are both risk aversion options, so the rise in the US dollar does not always mean that gold prices will slide."

He believes that gold prices can not touch the status of $350.

However, there are signs that more and more people are recognizing the views of Erb and Harvey.

Wall Street's big banks are reportedly lowering their gold target prices.

Goldman recently predicted that gold prices could fall below $1000 for the first time in 2009.