In this report, I cover the early market action from London on Monday, August 12th, 2019. I look briefly at the precious metals, the stock market, the dollar, the bond market and the price of WTI and Brent crude oil.
Today I look at another way to try and figure out when the reset of the monetary and financial system will be complete or near levels where confidence in the system might be gained back after a major crisis. I have spoken about the Dow to Gold ratio before but today I will focus on World Gold Stock as a percentage of World GDP.
I will reference the book "War and Gold" by Kwasi Kwarteng and show where the gold price might reset in the near futures. In the last century, 20% seems to be a level where the reset has occurred so I will look at at the present level of World GDP and World Gold Stock and the current market price of gold.
My conclusion is that this proportion of World Gold Stock might have to be higher than 20% of World GDP in the next crisis as after a century of war and inflation the market or the public could demand more gold backing in order for the monetary system to regain some semblance of confidence.
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