Price Assets In Gold To Remove Currency Bias, Discover Proper Correlation Analysis

When valuing an investment or asset, one of the more important considerations can be the currency in which that asset is denominated. Lewis Johnson, co-chief investment officer of Capital Wealth Advisors, advises that investors consider the markets in terms of their value in gold rather than a local currency. Before he is dismissively castigated as a “gold bug” with a tin-foil hat, Johnson makes significant contributions, particularly in regards to how a currency value can distort cross-market correlation analysis.

Gold is an unchanging scale

The primary reason Johnson looks at asset prices in gold terms is that he wants an “unchanging scale.” Such a thought occurred to him...