Calgary, Canada, November 16, 2010 --(PR.com
)-- An interesting valuation methodology for gold is to determine what gold price is necessary for each unit of central bank paper to be backed by gold reserves. Enquirica recently performed this calculation for the US and Canada using M1 as the monetary numerator.
US: 8,133 tonnes, M1 – US$ 1.8 trillion = gold price of US$ 6,888/oz
Canada: 3.4 tonnes, M1 – C$ 500 billion = gold price of C$ 4,574,146/oz
Despite the market perception of Canadian dollar strength relative to the US dollar, a move to re-impose a gold standard (a fully gold backed currency) could have far greater consequences for the Canadian dollar than the US dollar. The Canadian dollar would face an almost 100% devaluation in order to be backed by Canada’s current gold reserves.
Enquirica Research is a Calgary based research firm focusing on independent analysis of alternative asset classes, exempt market securities and investment opportunities, primarily in western Canada. For full copy of the report register at www.enquirica.com.
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