Valuation Indicators

Stock Market Valuation Indicators
The Markets in 2017 have been stagnant in most World markets except in the USA, after the Trump election rally. Gaging by historical valuation indicators, stocks and bonds are currently overvalued.
Since the 2008 crisis, the Markets have shown a "false" recovery, not due to private investors buying assets, but rather due to central and retail banks creating liquidity by buying assets, due central banks printing money.
Rather then follow the traditional Fundamental Analysis analogies, the majority of investors go by what central banks say and do. This will change as more people start to question what these banks are doing to their economies.
Be cautious as we do not currently have a free market.
The Buffett Valuation Indicator

Source : Advisor Perspectives


The Shiller PE Ratio Valuation Indicator

The above chart shows the current Shiller PE ratio of 29.81, which historically shows that the SP 500 stock index is overvalued.
The historical PE ratio mean is at 16.76.

Source : Muitpl



The S&P 500 Historical Price Valuation Indicator


The above chart shows the current S&P current price of  2432.46, the highest ever, which historically shows that the S&P 500 stock price index is overvalued and historical the highest ever in recorded history as of 15 June 2017.
The historical  S&P price mean is 246.25.

Source : Muitpl



The 10 Year Treasury Bond Rate Valuation Indicator



The above chart shows the current 10 Year Treasury Bond Yield of  2.16%, though it has increased from July 2016 low of 1.50%.
The Federal Reserve Central Bank has been raising interest rates and yet the yield is still close to  it's lows as compared to the mean of 4.58%.

Source : Muitpl



Gold to Monetary Base Ratio

The chart below shows the ratio of the gold price to the St. Louis Adjusted Monetary Base back to 1918. The monetary base roughly matches the size of the Federal Reserve balance sheet, which indicates the level of new money creation required to prevent debt deflation. Previous gold bull markets ended when this ratio crossed over the 4.8 level.

Gold historical is undervalued compared to how much money has been created.

Gold to Monetary Base Ratio

Gold to USA Inflation Rate 

The chart below shows the ratio of the gold price to the expected inflation rate. When the expected inflation rate go down in yield, normally the gold price goes up.The breakeven inflation rate represents a measure of expected inflation derived from 10-Year Treasury Constant Maturity Securities ( Bond ).

The Charts above show that most asset classes are overvalued.
Investing Matters believes that precious metals are the only asset class that are undervalued, in relation to the amount of money created by Central Banks.