I was just thinking in the vein that some people think gold is really more stable than cash and that it is cash that is varying in value. The only thing that makes cash money is that we believe it is. Everything could just as easilly be priced in gold and for a long while the dollar was valued in gold.
I get your point. Of course the value of gold, as indeed with most any commodity item is valued primarily on a supply vs demand basis. With something like gold, influences may be far more outside of a strict supply and demand but come under additional factors such as a hedge against inflation, times of social unrest, and so on. Lichello's post WW-II cautionary tale of how gold would actually fare in a crippled but recovering society does make one feel partial to be stocking soap.
As for the market being over or undervalued, I suppose if there's a way to get the historical overall P/E and compare it to the current value, that should give some rough measure.
Best,
AIMster
