The Golden Constant

10 Pages Posted: 21 May 2019 Last revised: 30 May 2019

See all articles by Claude B. Erb

Claude B. Erb


Campbell R. Harvey

Duke University - Fuqua School of Business; National Bureau of Economic Research (NBER)

Date Written: November 11, 2016


In The Golden Dilemma, Erb and Harvey (2012) explored the possible relation between the real, inflation adjusted, price of gold and future real gold returns. This update suggests that the real return of gold over the next 10 years could be about -4% per year if the real price of gold mean reverts or -12% per year if the real price of gold overshoots and declines to previous low real price levels. This view reflects a “golden constant” hypothesis that inflation is the fundamental driver of the price of gold. Of course it is possible to entertain other hypotheses. A “golden constant” perspective suggests a fair value price for gold of $840 an ounce and a possible overshoot price of $353 an ounce.

Related SSRN papers:
The Golden Dilemma
An Impressionistic View of the 'Real' Price of Gold Around the World.

Keywords: Gold, golden constant, real gold, overshoot, gold fundamental value, inflation hedge

JEL Classification: G10, G11, G12, G15, G28, E58, N20

Suggested Citation

Erb, Claude B. and Harvey, Campbell R., The Golden Constant (November 11, 2016). Duke I&E Research Paper No. 2016-35, Available at SSRN: or

Claude B. Erb

TR ( email )

CA 90272
United States

Campbell R. Harvey (Contact Author)

Duke University - Fuqua School of Business ( email )

Box 90120
Durham, NC 27708-0120
United States
919-660-7768 (Phone)


National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
PlumX Metrics