I am not an economist.
Just listened to The World This Weekend on R4. The presenter talked about bubbles, speaking particularly about gold, and said something along the lines of, “The price of gold is much higher than its value”.
If you think that an asset is overpriced, I assume you mean that future cash flows arising from the asset cannot generate an adequate return compared to its price. If you think goods for consumption are overpriced, I assume you mean that you would rather forego consumption at the asking price, and keep the cash instead.
Gold is, in a basic sense, almost useless. It’s a store of value, and not much else; hence it’s an asset that is not going to be consumed. The only way you can claim it’s overpriced, I think, is if you believe that the price is going to go down before you can sell. But right now, the flight from every other asset class is propping up the price. Isn’t that going to continue for the foreseeable future? Isn’t the value of gold precisely what you think you can sell it for, much more so than other kinds of asset?