Thursday, July 01, 2010

Value of Gold relative to financial assets

Paul Kedrosky is a very insightful commentator and today he shared a linked from JP Morgan research titled Gold is Way Under-owned Compared to Other Times When the World Sucked. The post comprises mainly a chart shown below:

Now, shouldn't the real value created between 1982 and 2009 account for the difference?
Do we really believe we are creating real value? We believe stock markets are ways to invest into things that create value. Now what happens to the value we have created between 1982 and 2009. Gold is growing very slowly while we have (assuming) created a lot of real value. This real value will sit in as financial assets thereby reducing share of gold. Right?