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222 Years Of Gold, Wars, Inflation, Economies, And Presidents

Tyler Durden's picture


Whether as the basis for the monetary unit of a country, or in its role in comparison to the currency of other assets, the price of gold has long been a subject of great interest to both the scholar and the general public. MeasuringWorth has created a multi-century time series of the barbarous relic's USD price. From the penny, the crown, the rose ryal, the guinea and the sovereign coin, the question of "what was the price then" is answered combining a number of sources and Visualizing Economics compares the 'real' price of gold since 1791 to GDP, wars, US presidents, and inflation...


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Sat, 06/15/2013 - 21:25 | 3661747 LetThemEatRand
LetThemEatRand's picture

I'll take real money for $1400 Alex.

Sat, 06/15/2013 - 21:48 | 3661779 SRSrocco
SRSrocco's picture

There seems to be more proof that Russia is buying more of its own domestic gold production.  Furthermore, the United States is actually sending more of its domestic gold production abroad... seems Bass-award:

Russia Purchased the Majority of Gold Miner’s Production

Sat, 06/15/2013 - 21:52 | 3661786 LetThemEatRand
LetThemEatRand's picture

Seems as if the barbarians are at the Gates.

Sat, 06/15/2013 - 22:06 | 3661809 Spanky
Spanky's picture

But whom are the barbarians? The ones outside, or those inside the Gates?

Sat, 06/15/2013 - 22:07 | 3661812 LetThemEatRand
LetThemEatRand's picture

The guys behind the gates would not bother stacking if the guys outside the gates didn't figure it out.

Sun, 06/16/2013 - 06:55 | 3662257 GetZeeGold
GetZeeGold's picture



Gold was around 5778 years before the rest of that stuff. It's the ultimate time tested hedge fund.


Sun, 06/16/2013 - 07:44 | 3662284 Cap Matifou
Cap Matifou's picture

You forgot 6 zeros from the end of that number.

Sun, 06/16/2013 - 11:01 | 3662453 AlaricBalth
AlaricBalth's picture

Anyone else notice that from 1774 to about 1950 deflation occurred approximately 35% of the time (62 out of 176 years). Then around 1950 until today deflation virtually disappeared from the official CPI.

Sun, 06/16/2013 - 13:35 | 3662872 Thomas
Thomas's picture

The inflation adjustment on that plot is a total load of crap: 2x price gain since 1981. How many moons orbit that planet?

Sun, 06/16/2013 - 14:07 | 3662932 robobbob
robobbob's picture


gasoline: 0.90/gal vs $3.60

moderate range car $8,000 vs $25,000

house $80,000 vs $180,000

gold looks lagging. maybe I shoulda stockpiled a fleet of circ '78 Lincoln Continentals

Sun, 06/16/2013 - 05:21 | 3662215 buyingsterling
buyingsterling's picture

My wife was born in LA to two Russian parents, and speaks fluent Russian. We've actually discussed moving to Russia. Ten years ago if someone suggested that, I'd have thought they were crazy. No longer.

Sun, 06/16/2013 - 07:28 | 3662271 Winston Churchill
Winston Churchill's picture

I employ a middle aged Russian.

She is contemplating returning to Russia for the freedoms she thought

she came to the US for.

Talk about irony.

Sun, 06/16/2013 - 09:10 | 3662368 RaceToTheBottom
RaceToTheBottom's picture

Dual citizenship is now an empowering option.  I would not have contemplated it earlier, now I am doing it.

Sun, 06/16/2013 - 12:03 | 3662668 francis_the_won...
francis_the_wonder_hamster's picture

Sure, but that still doesn't get you away from the US tax code/collectors.

Sat, 06/15/2013 - 23:45 | 3661966 Al Gorerhythm
Al Gorerhythm's picture

I see that chart as "The Real Value of The Dollar". There is much to debate about that too, as the dollar is backed by nothing other than good faith and credit of government.

Sun, 06/16/2013 - 07:35 | 3662277 merizobeach
merizobeach's picture

"good faith and credit of government."

And partnership with the military industrial complex.  Don't forget that part.

Sun, 06/16/2013 - 23:56 | 3664004 GAAP is crap
GAAP is crap's picture

The dollar is backed neo-slavery/every US Citizen.  That's the way I see it.  Taxing labor = slavery = the implicit backing of the US deby as money dollar.  A citizen can't even leave the country and get out of it.  Slavery.  I don't believe it to be backed by nothing.

I know, the "jurisdiction" argument.  Judges and IRS agents with AR-15's make a good case otherwise.


Sat, 06/15/2013 - 21:36 | 3661764 blindman
Sat, 06/15/2013 - 22:22 | 3661822 LetThemEatRand
LetThemEatRand's picture

Cowboys like smokey old pool rooms.

Sat, 06/15/2013 - 22:11 | 3661768 JustObserving
JustObserving's picture

Is that real inflation or massaged numbers courtesy the US Bureau of Labor Statistics?  Real inflation has been at least 3% higher than the official numbers for the last decade at least. If you use the 1980 methodology for calculating inflation, real inflation has been 6% or 7% higher than the official inflation for the last decade.

If real inflation is used (say, 3% higher than official numbers) for the last decade, US GDP is 30% lower than the current number.  On July 1, US GDP rises by $500 billion bacause of the addition of intangibles to the GDP.  US economic statistics are all smoke and mirrors.

Sat, 06/15/2013 - 23:55 | 3661992 Harry Dong
Harry Dong's picture

Yeah, something's really screwed up with this chart. If the mean and true price is just 600 then hallelujah. I'm borrowing $$$ to get some shiney stuff...kind of like what I did when it was just $250.


Sun, 06/16/2013 - 07:41 | 3662280 duo
duo's picture

Just use M2 or M3.  All are 10-11x higher than in 1971, implying a 6%  CAGR in money supply since then.  Add in 3X inflation between 1913 and 1960, and maybe another doubling during the '60s, and you've got 35-40X inflation since 1900, or 2.5 cents back then buys what a dollar does today.  That works out to 3.7% inflation over 100 years.

Unsklled labor in 1900, about $400 a year.  Today, about $16000.  Looks about right to me.




Sun, 06/16/2013 - 10:10 | 3662441 pcrs
pcrs's picture

A same price in 1980 and now, suggests prices have roughly doubled. That is more a factor of 4.

Sun, 06/16/2013 - 13:44 | 3662893 Missiondweller
Missiondweller's picture

In this case "real" is not meant as an economic term to imply its inflation adjusted.


This graph is worthless.

Sat, 06/15/2013 - 21:41 | 3661770 noob
noob's picture

barter on... bitchez
It takes two - Marvin Gaye & Kim Weston

Sat, 06/15/2013 - 21:51 | 3661784 alphamentalist
alphamentalist's picture

notice how there was never been deflation since the keynsians took over? hmmm.... it is like we are storing it up. mean reversion is a bitch. 

Sat, 06/15/2013 - 22:57 | 3661888 Urban Redneck
Urban Redneck's picture

In that case, the hyperinflationist gold bugs should look at the prekeynesian price performance of gold in inflation vs deflation...  

Sun, 06/16/2013 - 07:42 | 3662282 merizobeach
merizobeach's picture

Gold wouldn't need to be so expensive if everything else also wasn't.  Relative purchasing power is a more relevant measure than fiat dollar price of rehypothecated claims.

Sat, 06/15/2013 - 22:00 | 3661803 world_debt_slave
world_debt_slave's picture

Here the history of empires, a timeline, we are a failure.

Sun, 06/16/2013 - 02:02 | 3662105 bunnyswanson
bunnyswanson's picture

Strange phenomena taking place around me.  House parties.  People are visiting each other.  Cars are overflowing parking spots and I can hear music, car doors.  New American flags bigger than ever are flying on poles attached to homes. 

Meet your neighbors.  They are ready to talk about this now.  Throw a dinner party, BBQ, play cards? bingo?  It's time to move in doors and talk.

There is something in the air tonight :) Phil Collins -

Don't give up until that fat lady sings at your funeral.

Sun, 06/16/2013 - 06:50 | 3662255 world_debt_slave
world_debt_slave's picture

The citizens and central planners become delusional towards the end, e.g. Germany in the 1920's, the fall of Roman Empire, Babylon, etc.

Sat, 06/15/2013 - 22:07 | 3661811 Seize Mars
Seize Mars's picture

Don't forget. The plan here is to collapse the Soviets ("westernize" them) and then collapse America ("communize" us).

The plan is to bankrupt and ruin America. Get it straight. Of course they stole our fucking Ft Knox gold. Of course they are exporting America's fortune. They want us impoverished and powerless, ignorant and disarmed.

That's. The. Plan.

Sat, 06/15/2013 - 22:37 | 3661845 otto skorzeny
otto skorzeny's picture

and by "they" I assume we agree that it's a certain group that runs Wall Street and heads the Fed  but their name can't be mentioned here on ZH lest the pussy Swiss get their panties in a twist.

Sat, 06/15/2013 - 22:53 | 3661884 DaddyO
DaddyO's picture

The Druids, right?


Sun, 06/16/2013 - 04:10 | 3662190 Oldballplayer
Oldballplayer's picture

You have to watch out for those Druish Princesses.

Sat, 06/15/2013 - 23:05 | 3661903 Seize Mars
Seize Mars's picture

Bullshit. I'm not into closet racism. If you are, I don't care. But don't put that on me.

By "they" I mean the stars of the "Creature from Jekyll Island." The usual bank / oil / whatever / scumbags.

Sun, 06/16/2013 - 00:38 | 3662035 otto skorzeny
otto skorzeny's picture

I'm not closet about it -I hate the motherfuckers. Check your history- the fucking Rothschilds ran that little shitshow on your little island and we know the tribe they're from. That was a little bedtime story for all the conspiracy kooks to cover for the big show going on leading up to it.

Sun, 06/16/2013 - 01:29 | 3662083 JOYFUL
JOYFUL's picture

Before you claim some kind of moral high ground here... please lay out for us the exact nature of 'closet racism'... and as a further favor, include us in your reasoning as to where you discovered it in the comment you responded to

and by "they" I assume we agree that it's a certain group that runs Wall Street and heads the Fed  but their name can't be mentioned here on ZH lest the pussy Swiss get their panties in a twist. *

so that we can all be made aware of what 'closet racism' involves...

thanking you in advance...


*the comment in itself is a red herring... as was the putative "Swiss racism law" explanation for the fevered and frantic attempted putsch which took place here a few weeks back... wheels within wheels... lies within lies... there's still plenty of lines of enquiry to be teased out from the ball of bullshit which has been spun here in the hopes of freezing debate and manufacturing 'consent' to invisible limits.

Sun, 06/16/2013 - 07:35 | 3662275 Sean7k
Sean7k's picture

There was only one "star" of Jekyll Island: Bernard Baruch, a known operative of the Rothschilds and one of the most influencial advisors to presidents until FDR. Baruch was a zionist. This has nothing to do with rascism or anti-semitism ( a made up assignation). 

I have noticed, that since the new policy was adopted here, I have not had a single comment censored. I do keep my comments historically based and leave out any slurs. Further, it is not only the Swiss that have their panties in a knot. I recently ordered a copy of the Protocols of Zion from Amazon. Read the disclaimers, obviously required by the ADL, including their own.

Censoring free speech, as well as controlling the content in media is what the zionists do. It is not only banking control and government takeovers. I have never read a disclaimer on a book before and I buy hundreds of them. 

Using terms of inclusion to obscure the real players is a common propaganda tactic. Perhaps you are just naive, I certainly hope so. 

Sun, 06/16/2013 - 10:33 | 3662472 disabledvet
disabledvet's picture

You need to read up on this guy. This is about "manufacturing consent" and the contradictory belief of both "having a democracy" and "running the country." it is a mistake to think "somewhere in the middle is a capitalist." the person in the middle is the MEDIA. Bernard Baruch was not a media person.

Sun, 06/16/2013 - 13:48 | 3662896 Sean7k
Sean7k's picture

I'm well aware of Walter Lippman, but would suggest better sources than wikipedia. There is not a conspiracy book wrtten that doesn't account his contributions to tyranny. However, Baruch wrote the FED reserve bill, he ran the War resource board and advised every president from Roosevelt to Hoover. 

The Zionists work on many levels.

Sun, 06/16/2013 - 11:10 | 3662557 Tinky
Tinky's picture

Setting aside the accuracy (or lack thereof) of your charactization of Baruch, he did author my favorite investment quote ever. When asked by a financial journalist (writing for Forbes, perhaps, and I am paraphrasing) "To what do you owe your tremendous success investing in the stock market?", Baruch responded: "Selling too early."

Sat, 06/15/2013 - 22:55 | 3661885 Cabreado
Cabreado's picture

What is bankrupting and ruining America is not about gold; it never was and never will be.

While I've been in my share of boating accidents, I'm not sure if you realize that your version of "the plan" renders PM's useless?


Sun, 06/16/2013 - 07:54 | 3662292 merizobeach
merizobeach's picture

"That's. The. Plan."

Ok, well, then, what's next?  Because 'the plan', as you've outlined it, has been accomplished.  Yeah, some of you are still armed, but could enough of you ever be amassed so as to outgun Big Brother?  Don't get me wrong, I'd pay per view to see that.

Sun, 06/16/2013 - 10:30 | 3662465 economicmorphine
economicmorphine's picture

Disagree. If a bunch of rag tag rebels in Afghanistan can keep Big Brother occupied for 12 long years, I can only imagine what 25,000,000 Texans will do when they've finally had enough, especially when native sons of the Lone Star Republic are forced to pick sides.  They will abandon Big Brother in droves and his military will be a shell.  Viva Libertad.  Viva Texas.

Sun, 06/16/2013 - 14:36 | 3662995 robobbob
robobbob's picture

Nothing is accomplished. Only indvidual steps towards the goal. The Plan is to impoverish and decimate all effective opposition until nothing is left but ignorant serfs. Death of a thousand paper cuts and slow starvation into submission without a critical mass ever forming to rise up and accurately engage the true puppet masters.

First they will ridicule. Then they will infiltrate and co-opt. Then they will pre empt. Finally scapegoats will be offered. As if the guy running the deli, doing accounting,  or doing your proctology examine have absolutely anything whatsoever with the top mechanations. Should that fail, major war has always done the trick.

Heirarchy of disposability: Minorities-racial or political, Society at large, Shephardic before Ashkanaz, Ashkanaz before zionists, anyone or anything before the elite.

Know your enemy. Know their tricks. When they point their finger and offer up scapegoats, don't fall for it.

Sun, 06/16/2013 - 08:11 | 3662301 Sean7k
Sean7k's picture

The plan is to seize control of the world. Why would they ruin the most productive countries with the most wealth? They want to possess  and control the wealth and labor productivity. Why would they move mass amounts of wealth, when they don't need to?

People have often been impoverished, ignorant and disarmed. It is the leaders of a society that must be made powerless and disarmed. You never impoverish the leaders, they control the people. 

Gold/silver are meaningless in this equation. There is no way to establish a value for them, because they have passed from recognition as money. People actually think currency is money, rather than a money substitute. 

Gold and silver will only be useful if: one, black markets are established or two, it becomes the premier collateral instrument in a monetary reset. The concept of wealth protection ASSUMES our society will retain some measure of freedom. This is the first time in history that currency can be hyperinflated with minimal repercussions for its' value. Why? People have lost all knowledge of real value, private property and functioning markets.

It is all about managing perceptions of wealth and the standard of living. Most people are incapable of penetrating this matrix. Especially if they lack the historical wisdom that can come with age. If you can control the system outcomes for a timeframe that exceeds the lifetime of people, you can rewrite history, economics and politics. 

The Zionists started in the 1870's. They gained control in 1918. It is all managing perceptions now. 

Sun, 06/16/2013 - 10:33 | 3662473 economicmorphine
economicmorphine's picture

Utter nonsense.  The plan is to eliminate between 5-6 billion of the 7 billion people on the planet.  What has happened up to this point is merely setting the table.  Everything the developed world has built has come out of the ground.  Oil, coal, metal, silicon, plastic, food, water you name it.  It is all from the earth.  The earth is too crowed and allocating what's left among 7 billion people isn't going to work, so 6 billion of us have to go.  That. Is. The. Plan.

Sun, 06/16/2013 - 13:24 | 3662853 Sean7k
Sean7k's picture

The black death was the last large scale population reduction. It brought forth the reformation, renaissance, artisan guilds and capitalism- resulting in the greatest expansion of freedom to date. Population reduction will be relative to excess labor. The key is excess.

Most everything in the developed world has come from added value (like plastic). Resources are only a part of the equation.

The plan is about control over all people.

Sun, 06/16/2013 - 10:35 | 3662474 economicmorphine
economicmorphine's picture

Still learning how to use the computer.  Double post.

Sun, 06/16/2013 - 11:18 | 3662576 Tinky
Tinky's picture

While I often find myself in agreement with your posts, I am amazed at a couple of your assertions above.

"People actually think currency is money, rather than a money substitute."

Have you ever been to China or India? If not, surely you are at least peripherally aware of the important history of gold as a store of value in those countries, and the steady or rising demand for the barbarous relic. 

"Gold and silver will only be useful if: one, black markets are established or two, it becomes the premier collateral instrument in a monetary reset."

You state that in a manner which suggests that you somehow believe them to be unlikely. Of course gold will become a premier collateral instrument in a monetary reset. How is that not the most likely scenario?

Sun, 06/16/2013 - 13:42 | 3662876 Sean7k
Sean7k's picture

Sorry, my reference was to the west in regards to currency. I am well aware of the asian traditions towards gold and silver.

I have recently began to question whether gold will "be allowed' to remain a store of value. The present behavior of gold in pricing (regardless of manipulation) is at odds with traditional theories on expansive monetary policy. This implies the ability to DETERMINE price no matter the conditions. 

Further, if allowed to operate as it has historicaly would create a dangerous channel for the acquisition of power, power that is beyond the Elite's control. The Elites are betting that control of government and state coercion will trump financial independence from alternative value instruments. Especially as they control the media and most westerners have so little investment in gold and silver- evil hoarders and all that.

Further, what happens to all that gold in Russia, China And India, if it is never allowed to become part of the SDR basket? What if it is removed from tier one status as collateral?  Without freedom to choose your currency, can it not be marginalized?

Perhaps I'm just pessimistic today...

Sun, 06/16/2013 - 14:10 | 3662927 Tinky
Tinky's picture

Thanks for the clarification, Sean.

The reasons that I remain optimistic (re: gold price) are as follows.

I have the strong impression that no matter how much those in power in the West would like to accomplish some of the goals that you annunciate, events have already spun out of their control. I believe that there has been so much energy pent up due to their suppression schemes, that there is no way that they will be able to methodically release it for much longer.

Despite the (eroding) reserve status of its currency, and military strength, America's power in the world is palpably declining. China, Russia, etc., on the other hand, are ascending. Those powers appear to recognize the importance of using gold as a fundamental pillar of State wealth, and any new reserve currency or (more likely, perhaps) basket of currencies.

How could the world possibly paper over – so to speak – the one medium that has consistently, over millenia, proven to have been a store of value?  I don't see how gold can be marginalized under these conditions.

There is a good deal of evidence suggesting that there is a growing divergence between the paper and physical markets for gold. That would be consistent with the counter-intuitive price action of late, and would also be consistent with a likely sharp move higher soon after the next crisis.

Ponzi schemes must ultimately fail. How could the current, unprecedented array of such schemes not result in a series of cascading crises, and a final flight to safety? And how could gold (bullion) not prove to be one of the last remaining safe havens?

I cannot conceive of a scenario in which gold prices will not appreciate significantly in value over the coming few years. Capital controls, on the other hand, are a different, and in my view, more sobering matter.

Sun, 06/16/2013 - 14:30 | 3662979 Sean7k
Sean7k's picture

I agree with every thing you say and have agreed for three years. Every pundit has agreed for three years. I continue to watch the JPM inventory numbers and their negative gold balance, MF global, derivative markets, under capitalized banks, waiting for the world to wake up.The date keeps getting pushed out. 

Who would have thought the yen would behave as it has in the light of massive easing? Europe has been broke and bankrupt for YEARS. The US has so much debt, it is unfathomable to conjure up a scenario  where it doesn't collapse. 

Still, the countries soldier on, wars are fought, bonds are bought, hedges cover and the comex opens on monday. Scandals ensue, inflation runs wild and unemployment is staggering, but it is not enough to chase people into gold. It is not enough to keep them from spending. It is not enough to keep them from the military. Regular false flag events, crippling weather events, scandals and security run amuck, but still the world revolves, people go to work and never question how it all stays together.

Managing perceptions to effect proper behaviors and maintain the status quo. Who cares if smart people figure it out? They are a small, impotent percentage. 

I still prefer gold and silver to fiat, but I may be on the wrong side. I can live with that...

Sun, 06/16/2013 - 14:39 | 3663004 Tinky
Tinky's picture

What you are saying, in essence, is that you are surprised that (pick your preferred euphemism) TPTB have been able to keep the balls in the air for this long. Yes, I am as well. 

But it is only a matter of time, and time is running out.

You're not on the wrong side of the trade. Just be prepared to take quick action when and if significant gains are realized.

Sun, 06/16/2013 - 08:38 | 3662331 negative rates
negative rates's picture

Yea, what comes around goes around these days.

Sat, 06/15/2013 - 22:44 | 3661866 Diablo
Diablo's picture

Seems legit, no bubble there. 

Double top, bitchez.


Sat, 06/15/2013 - 22:53 | 3661882 darteaus
darteaus's picture

Hmmm. Chart doesn't show spike to $1934 that occurred 2 years ago, and the drop since then.

Sat, 06/15/2013 - 23:39 | 3661959 seek
seek's picture

That is quite the omission, ain't it?

The only explanation would be if it was in real dollars and we'd had a spike of 15% inflation in those two years. Which kinda sorta has happened, but not reported in the CPI.

I'm wary of the message here, since there's also the implication it's repeat of the highs seen in 1980 and it'll mean revert to $400.

Sun, 06/16/2013 - 10:44 | 3662498 disabledvet
disabledvet's picture

oil, gasoline and natural gas prices have definitely surged in these past two years. if we go by some so called "law of supply and demand" the amount of gasoline usage has completely collapsed...along with miles driven actually...and yet still we pay through the nose for gasoline. "i smell a rat." shuttering coal mines? really? sorry but these price inflations seem like "yet another bank recapitalization plan" and i agree...VERY negative for gold going forward. i do agree there will be Great Reset coming...but certainly not in the immediate term. banks will keep buying gold of course. they've never had it so good. it is ironic that they find a hard time making in this market...which yet again is not supportive of the price of gold either. should be good for producing F-150's though...

Sat, 06/15/2013 - 23:43 | 3661967 RaceToTheBottom
RaceToTheBottom's picture

I have a real question about gold.  Since the dollar has lost about 98% of its value since 1913, should not gold be worth a little less than 100 times its 1913 price in dollars?  According to the chart above, that would be 600*100$= 60,000.  Why is it not acting that way?


PS, BTW, I own a lot of both Gold and Silver, physical and audited paper.

Sat, 06/15/2013 - 23:47 | 3661974 Harry Dong
Harry Dong's picture

Easy. You're already adjusting for inflation, take 100 x $20.67 and find out your answer


Sun, 06/16/2013 - 02:38 | 3662137 Bear
Bear's picture

If indeed we have lost 98% of dollars value since 1913 then you could calculate the price of gold as:

20.67 / .02 = $1033

but according to an inflation adjusted price of gold should be:

20.67 *  approx 22 = $455

in 1920, 20 ounces of gold would buy a decent new car. Today 20 ounces buys you an excellent new car.

Using a variety of common items to purchase then and now  ...  gold would appear to be over priced.

Unfortunately, for the last 100 years, value has been measured in dollars and not in gold or silver; thus, the arbitrary price of $ 20.67 in 1913, was not a true reflection of its 'value' then, just as $1400, isn't a true reflection of its value today.

Sun, 06/16/2013 - 05:27 | 3662220 buyingsterling
buyingsterling's picture

How much has productivity increased since 1913? Everything should be massively less expensive relative to gold, which mist make gold seem overvalued.

Sun, 06/16/2013 - 10:55 | 3662522 disabledvet
disabledvet's picture

good question. and the answer is "a lot." having said that "inflation compounds"...not gold. so sure, the dollar has lost "98% of its value since the Federal Reserve was created." But in actuality the dollar has lost ALL it's value. ALL paper money is ENTIRELY worthless. the question therefore isn't "what can i buy with one ton platinum coin" but with a single copper penny. "ain't like there's a shortage of copper." it's just "so much easier to inflate everything away." no accountability, just a numbers game. "at least until Detroit blows up." this in the middle of the greatest bull market since the 90's! "there will be more Detroit's." the Banks in their current form can only capitalize so many Cities, let alone States and Countries. Oh, and "good luck getting insurance on that" as well.

Sun, 06/16/2013 - 10:08 | 3662433 Ckierst1
Ckierst1's picture

Another interesting way of approaching it is by relative rarity - take the number of extant US dollars out there (globally is fun - there are several types and estimates) and divide it by the total number of ounces of gold ever produced (those estimates are also out there).  The results are shocking and that's just for dollars.

Sun, 06/16/2013 - 11:08 | 3662553 disabledvet
disabledvet's picture

sure. "these paper currencies are reseting all the time." that's why equities are you're first stop in the Age of Permanent particular index funds "which are the ultimate expression of devaluation" not gold. You want in on the WEALTH of productive assets.

Sun, 06/16/2013 - 13:03 | 3662785 HardAssets
HardAssets's picture

" the arbitrary price of $ 20.67 in 1913, was not a true reflection of its 'value' then, just as $1400, isn't a true reflection of its value today"

on this point we are in agreement. In fact, the dollar was defined in terms of a certain quantity of silver in the US Constitution. This was related to the common international currency of the time, the Spanish reale (or 'Pieces of Eight'). The 'dollar' was also later defined in terms of a physical quantity of gold. These precious metals have been the standard of measurement, being the preferred medium of exchange. The dollar 'pricing' that we watch so closely is full of flaws and deception. We rely on dollar 'pricing' and fill our charts with them, because thats all the tools we have. We're chasing phantoms, ghosts.

History teaches that no fiat paper money system has survived. Precious metals have been used as a medium of exchange for thousands of years. In the end, that's about all we can really go on.  Though I'll continue to play with techncial analysis and my charts anyway. Its a long time habit and sometimes offers short term advantage.

Sat, 06/15/2013 - 23:48 | 3661977 CuriousPasserby
CuriousPasserby's picture

An uninformed look at this chart might convince someone that gold is now overpriced and due to revert to a norm of somehwere around $400 to $600. But considering the fact of unlimited money printing by the Fed and other governments, which never happened before in the history of the dollar, that would be naive.

I'd like to see a similar chart showing the price of gold in German Marks through 1923 or in Zimbabwe dollars.

Sun, 06/16/2013 - 09:30 | 3662316 HardAssets
HardAssets's picture

Well, anyone can draw up and post a chart - - - that doesn't mean its valid (or not valid).

I have questions about her graph. She measures the 'real value' of gold - - - what is the standard by which its price is measured ?  She says her graph is in terms of the value of USDs - - - which they are printing up more of each month. In addition, what measure of inflation is she using ?  The government reported numbers which have been altered in terms of the methodology used to calculate them ?

Various sources have stated that the purchasing power of the dollar has declined by some 97% since 1912. The graph of that would be a long curve sloping downward. Does that match whats depicted in this graph ?

For numerous reasons, gold is THE historical standard against which monetary values are measured. If we were to stand down at the bottom of a gigantic hour glass and try to measure the length of our yardstick in terms of a sand pile that was growing in height randomly by the minute, as more sand was piled up on top . . . we wouldnt have any success.

The one thing that would throw off the gold measuring standard would be if a vast supply of new metal came into the market - - - such as the New World gold imported by the Spaniards in the 1500s, 'Yamashita's gold' (Japanese WW2 plunder supposedly hidden away in vast secret reserves), some magic machine producing it out of lead as the alchemists envisioned, or the discovery 500 years from now by starship crews, of a planet made up of the stuff. - - -Haven't seen any solid evidence of such a supply lately, so the gold measure seems secure for the time being .

IMO the graph is greatly flawed and of no value. Those who compare todays prices for gold to those of the 1980 peak often preface their comment with "even given the government's flawed inflation reporting, todays price of gold of X is only equivalent to Y in terms of 1980 dollars . . . "  They recognize the dollar measure itself is flawed.

Also, given derivatives 'paper gold' - - - what is reported as 'price' is one big fat question mark.

Sun, 06/16/2013 - 00:08 | 3662007 Pairadimes
Pairadimes's picture

Fiat go boom.

Sun, 06/16/2013 - 01:42 | 3662093 Kirk2NCC1701
Kirk2NCC1701's picture

They (CBs) are all buying into SDRs.

The SDR will be priced on real assets for their respective countries. Since the Chinese don't have as much in agro or energy resources, they just gotta have gold. The US/West... not so much need for gold. Got other resources.

The Reset will be tough, very tough, but not exactly as most expect. Expect to be surprised. Sept-Oct time frame.

Sun, 06/16/2013 - 02:24 | 3662121 holgerdanske
holgerdanske's picture

This graph is amazingly useless. It does not take into consideration/visualize the increasing amount of paper dollars that have been created. Clearly 100 dollars 300 years ago can't be measured at the same scale as 300 dollars today?

Looking at the graph, as it has been made, indicates gold as a bubble, which I am convinced is not the case.

Sun, 06/16/2013 - 02:58 | 3662149 aleph0
aleph0's picture

"This graph is amazingly useless" .. agree 100%

... apart from just measuring is USD .. it doesn't show the real picture at all.

Just take mid 1986 .. where Gold cost DM 80,000 / Kg. which is the same as ca.  EUR 1,250  / Oz.

Nearly 30 years later in 2013  - after ( or despite )  massive Debt expansion,  the POG today is actually LOWER : EUR 1,039 / Oz.


Sun, 06/16/2013 - 16:06 | 3663173 css1971
css1971's picture

It uses a fairly suspect measure of inflation.

Sun, 06/16/2013 - 06:07 | 3662232 justamousesquared
justamousesquared's picture

I am simply following the example set by the chinese and buying with both hands in the following order:

1. Water

2. Food

3. Silver

4. Gold

5. Petrol, polystyrene, bottles and rags

Sun, 06/16/2013 - 06:39 | 3662248 fijisailor
fijisailor's picture

A far different picture shown here on these graphs.

Must be different opinions about how much inflation we are having.  Obviously much greater than official stats.

Sun, 06/16/2013 - 07:32 | 3662274 NipponMarketBlog
NipponMarketBlog's picture



Notice how in recent years, the gold price has gone up even as inflation has remained low. So either the gold price is in a bubble, or the official inflation rate is being badly mis-represented. I wonder which one it is......

Speaking of inflation - The Japanese government is now issuing inflation-linked bonds again. Quite possibly the very worst idea they could come up with in the context of aggresive QE and monetization of the government's debt:

Sun, 06/16/2013 - 09:44 | 3662414 Ckierst1
Ckierst1's picture

The latter of course!

Sun, 06/16/2013 - 10:10 | 3662442 Mr. Hudson
Mr. Hudson's picture

The chart above shows gold was at its lowest in the 1920's when credit was easy and interest rates were low. Apparently, the price of gold was being manipulated then.

Sun, 06/16/2013 - 08:55 | 3662347 css1971
css1971's picture

Um. Could they do the same chart but with wheat? IndexMundi don't have 200 years, only since 1980s

Wheat vs USD. Tripled since 2000.


Sun, 06/16/2013 - 09:11 | 3662372 Peter Pan
Peter Pan's picture

You cannot compare then and now because there is no comparison. The number of variables in the world have increased and their relative significance has also varied. Just minimize debt and cost of living and the rest will take care of itself.

Sun, 06/16/2013 - 09:41 | 3662408 Ckierst1
Ckierst1's picture

Nonsense!  It's important and otherwise called "history".  If you study it you may actually avoid unfortunate, tragic and evil events and their consequences, assuming you learn from the experiences of others and act on the knowledge.  You may also capitalize from the knowledge. :-)

Sun, 06/16/2013 - 12:35 | 3662743 HardAssets
HardAssets's picture

Yes, you can study history. Its of vital importance to do so, especially given the 'numbers' presented to us today.

History teaches that no fiat paper money system has survived. The Chinese who invented paper money  a thousand years ago, leaned that lesson. Their current purchases of gold suggest they never really forgot it.

Sun, 06/16/2013 - 09:11 | 3662373 toadold
toadold's picture

As something of a side note: I have a relative that collects German porcelain   coins  issued by banks and municipalities to combat the metal coin shortages during and after WW I.  The funny thing is his good condition coins are now worth more than their face value in Euros. I asked him if he was going to sell and got a Texas accented NIEN!  Collectors are funny.  I kind of wonder how long people have been collecting coins? I also wonder how many gold coin buyers are closet collectors and not insurance against inflation buyers?

Sun, 06/16/2013 - 10:28 | 3662461 Eally Ucked
Eally Ucked's picture

The graph presented is total piss which not take into consideration real inflation and future inflation as result of massive printing now, invisible for now but it will show up in the future.

The best measure of price of gold as it should be (which includes inflation, lack of new discoveries, geopolitical climate and so on) is the cost of extracting 1 oz of gold. This article should be useful in assesing it, I'm not totally conviced that everything contained in this article is up to proper standards as it is some kind of PR job too but it will give us some sense where the price should be. And those 600-700$ experts are full of shit.

Sun, 06/16/2013 - 10:55 | 3662521 Chicago_cranium
Chicago_cranium's picture

When sth hits the fan, you cannot eat gold, in net effect for your own survival, it is not different than paper money. You will survive with other commodities like beans, water, clothes, etc. I run a successful clothing business for women, any excess dollars I have, I buy new commodities with. The only concern of course is the high packing density of clothes compared to gold. Gold is a high-density commodity, you can store more value in a briefcase filled with gold, than two warehouses of clothes. But both property types are at risk in case of riot, etc. I think clothes, food, etc will be more liquid and easier to barter. I'm not sure why everyone is obsessed with only gold. This is good to transfer wealth to survivors, but for your immediate self, you should focus on stocking up on other more meaningful for life commodities.

And if you store other commodities that you can readily sell, you grow your wealth, everyday in a controlled way, since inflation helps you short-term, you also pay import tax, and benefit the Chinese, this feedback loop, my action, will delay the inevitable, if many people follow suit. It is an engine for growth!

Sun, 06/16/2013 - 13:33 | 3662871 highandwired
highandwired's picture

"I think clothes, food, etc will be more liquid and easier to barter. I'm not sure why everyone is obsessed with only gold."


"Everyone is obsessed with gold" because gold is money and the other stuff you mention is not. Simple

Sun, 06/16/2013 - 11:22 | 3662582 therover
therover's picture

Physical gold/silver can never be overvalued compared to fiat currencies.


The former is in finite amounts and requires labor to be produced. The latter is being created in infinite amounts with the flick of the wrist. 


In the REAL free market/economic world, a real tangible product created via labor should always be worth more than a fake product created by magic.

Sun, 06/16/2013 - 11:22 | 3662584 css1971
css1971's picture

Um. Could they do the same chart but with wheat? IndexMundi don't have 200 years, only since 1980s

Wheat vs USD. Tripled since 2000.

or oil in USD. Also tripled since 2000.

300% increase in 13 years says inflation is 8.5% per year.

Sun, 06/16/2013 - 11:58 | 3662654 falak pema
falak pema's picture

the changing role of central banks; from the victorian age to today : interesting overview, with a marked trend to less CB independence in the future and more government/CB collaboration on fiscal, monetary and debt/inflation tradeoffs.

Sun, 06/16/2013 - 12:09 | 3662688 Marty Rothbard
Marty Rothbard's picture

That chart almost certainly uses the USGOV CPI as a proxy for inflation.  It understates both true inflation of the monetary supply, and consumer price inflation, so the true number would be much lower than $1700, if an accurate number for annual inflation was used.

Sun, 06/16/2013 - 12:15 | 3662708 JJ McApe
JJ McApe's picture

nice double top we got there :D

if thats the case, see you at 400

Sun, 06/16/2013 - 15:35 | 3663117 BurningBetty
BurningBetty's picture

People tend to forget why price of gold tumbled from ATH in the 80s. Interest rates exploded back then. You could leave your money in the bank and scoop 10-15% interest on the money every year. Go figure. Now the interest rates can't even go up. They are at close to 0%...different times, different story my friend.

Sun, 06/16/2013 - 16:32 | 3663212 Quinvarius
Quinvarius's picture

I hate to destroy your faith in Government inflation data, but in 1971 dollars, based on Money supply and Gov gold supply, gold is only $29 an ounce right here.

Sun, 06/16/2013 - 15:58 | 3663157 Quinvarius
Quinvarius's picture

In 1981 the Base Money supply was 160 Billions.  Today it is 3245 billions.  That chart is not really accurate at all.

Sun, 06/16/2013 - 17:59 | 3663357 css1971
css1971's picture

And this makes my point above...

(3245/160)(1/32) - 1

= 9.8% yearly inflation rate

Which pretty much matches the story commodities tell.

Sun, 06/16/2013 - 17:32 | 3663261 css1971
css1971's picture

How to calculate a yearly percentage change from an absolute change over a longer period:

ok, say fish have increased in price from €0.84 to €2.90 in 12 years the total percentage chang is 350%... It's approx tripled, multiplied by 3.5. What's the yearly inflation rate?

=  ( €2.90 / €0.84 ) (1/12) - 1

= 11% per year

You can now calculate the yearly inflation rate of anything over any number of years. BTW, the numbers above are for corn since 2000. Its ~ $290 today and was circa $84 in 2000.

US dollar inflation's running at between 8 and 12 %. Not 2% This is why China's magic "growth" figure is 8% per year... It's purely USD inflation, which they're pegged to.

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