Our second chart, above, is of the ratio of US$Gold price to the quantity of U.S. dollars, M-2 NSA. Solid black line is the mean of that ratio for the period of time shown. Upper line, in green, is the mean plus two standard deviations. Based on the data in the chart, the probability of the ratio being above the green line is about 1 out of 6. Currently, $Gold, based on this measure, should trade lower.
In short, the price currently being placed on $Gold should not persist. Yes, the speculative traders now in control of the Gold market can push it higher in the short run. However, ultimately the price of $Gold should reflect the fundamentals. And we note further, gravity is stronger than all the speculative hedge funds collectively.
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