The Dow Jones index suffered a steep decline last Tuesday. At the end of the week, stock markets closed at about five percent lower than at the start of October (yesterday, stocks have recovered a bit). Gold, in response to this recent stock market decline, rose by more than two percent, to a level exceeding $1,200 dollar per troy ounce. What is going on?

Earlier this year, I did a first attempt to value gold. The problem with gold is clear: it is incredibly difficult to value an ounce of gold, because we have no yardstick or underlying value to measure gold against. Better put: we can value a company by estimating the future discounted cash flows that the company is able to generate. Subsequently, we can compare our valuation (the company’s “underlying value”) against the current stock price (the “market value”), with the knowledge

Reality is finally dawning on investors: we are on the verge of a global trade war. As a consequence, last week, the Dow Jones Index closed on Thursday for the eighth day in a row with a loss. A rather rare event, since such persistent losing streaks do not occur often. Both in 2008 (during the Great Depression) and in 2011 (during the European sovereign debt crisis), the Dow Jones had an equally bad losing streak. Yet, ever since, a losing streak as the one we observed last week has not occurred.

In China, things look even worse and have actually become considerably worse since the beginning of the US-China trade war: the Shanghai stock index is down by almost 20% year to date. So far, the Chinese stock market has been one of the worst performing stock markets in the world in 2018. What