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Gold prices are hitting records

wsj.com

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Re: Gold prices are hitting records

#41

Post by incomingpain »

Dig1t wrote: post #3
ortusdux wrote: post #2

If you adjust for inflation, there have been 3 periods in the last 50 years with higher gold values. https://www.macrotrends.net/1333/historical-gold-prices-100-...

Looks like Great Depression, 1979/1980, and right after the Great Recession. What is the significance of 79/80?

Here's a better way to look at it.

What was 65 years(retirement age) year before each of these.I'll do it for you.

So 1930 - 65 = 1865. The end of the American Civil war.

1979 - 65 = 1914. The end of WW1

2009 - 65 = 1944. The end of WW2

Each of these events correspond with a major baby boom post war and subsequent major retirement period. These financial crisis are a consequence of major war.

Economists figured this out ages ago and now understand how to prevent future recessions.

So how about covid?

2020 - 65 = 1955 end of korean war.

It was simple to predict "covid" and guess what I was invested in on January 2020. Large cap healthcare. Big box consumer staples. All the stuff that would stay open.

Also an interesting discovery. No amount of money printing keeps the economy afloat, you must let it crash.

2040 is the next big one for vietnam, but that was a long war. Might not be the same. Might be harder to predict.

Re: Gold prices are hitting records

#43

Post by viknesh »

fatherzine wrote: post #27
ortusdux wrote: post #2

If you adjust for inflation, there have been 3 periods in the last 50 years with higher gold values. https://www.macrotrends.net/1333/historical-gold-prices-100-...

the gold price serves as an independent yardstick for the level of real inflation. it defeats the purpose to 'adjust for inflation'. 'adjusting for inflation, prices have been remarkably stable for the past century'

The reasoning is correct but the conclusion is backwards IMO.

You should "adjust for inflation" (using other measures for inflation) to examine the current price of gold. If gold is still expensive, either the inflation adjustments are incorrect, gold is mispriced, or external force is driving demand for gold.

Put another way, because gold is an "independent yardstick" for inflation, you have to "adjust for inflation" to draw any conclusions about the current price of gold.

Re: Gold prices are hitting records

#44

Post by factorialboy »

ramboldio wrote: post #35

How can gold and stock prices be at record high at the same time?

It's not that hard. We printed dollars in record numbers (bipartisan - both Trump and Biden).

Of course assets will pop in dollar-terms. Fed's interest rate controls are bound to ease up, as the US economy is _addicted_ to getting injected with printed fiat currency.

Re: Gold prices are hitting records

#46

Post by grotorea »

fatherzine wrote: post #27
ortusdux wrote: post #2

If you adjust for inflation, there have been 3 periods in the last 50 years with higher gold values. https://www.macrotrends.net/1333/historical-gold-prices-100-...

the gold price serves as an independent yardstick for the level of real inflation. it defeats the purpose to 'adjust for inflation'. 'adjusting for inflation, prices have been remarkably stable for the past century'

Doesn't it make much more sense to use the prices for usable goods and services as the yardstick? Gold is supposed to not lose value to inflation but that's not a proven rule is it?

Re: Gold prices are hitting records

#47

Post by HarHarVeryFunny »

foobarbaz33 wrote: post #14
nostromo wrote: post #8

The US real estate to gold ration has always facinated me: https://www.longtermtrends.net/real-estate-gold-ratio/ If you bought a house with gold in 1890 or 2023, the price would be... about the same.

I forget where I heard it. Supposedly the amount of silver needed to buy a goat during Roman times is similar to today. Cold metal seems to act as cold storage of value across history.

> Supposedly the amount of silver needed to buy a goat during Roman times is similar to today

Interesting factoid if true, but it's hard to see how this could be anything other than coincidence. The relative scarcity, and demand, for goats vs silver must have changed massively due to things like modern factory farming, modern mechanized mining, modern fiat currency, modern food alternatives, etc, etc.

So, if the price of goats in silver is in fact still the same, I don't think the takeaway should be that these two commodities can be assumed to still have the same relative supply vs demand of 2000 years ago, and that this proves that bullion is a good store of value (even if it is).

Re: Gold prices are hitting records

#48

Post by AdamH12113 »

nostromo wrote: post #8

The US real estate to gold ration has always facinated me: https://www.longtermtrends.net/real-estate-gold-ratio/ If you bought a house with gold in 1890 or 2023, the price would be... about the same.

Just to be clear for anyone who didn't actually look at the graph, the ratio varies by about a factor of five over the last hundred years, with wild swings due to the Great Depression/WW2, what I assume is inflation in the 1970s, and the early-2000s housing bubble. And while the 1890s value is more similar to 2023, the ratio varied by tens of percentage points in the years around both of those dates. So it's not like the price of housing is stable if you use gold instead of dollars. (The post I'm replying to did not imply this. I mention it because there's a tendency to abuse these kinds of facts to construct neat little narratives about currency.)

Re: Gold prices are hitting records

#50

Post by [deleted] »

vel0city wrote: post #32
fatherzine wrote: post #27

Earlier quoted context omitted.

the gold price serves as an independent yardstick for the level of real inflation. it defeats the purpose to 'adjust for inflation'. 'adjusting for inflation, prices have been remarkably stable for the past century'

> for the level of real inflation I'm not normally doing much business in gold, the value of gold compared to the dollar is nearly meaningless to me. I do often buy things like food and energy. To me the value of the dollar compared to a gallon of gas or a plate of food or a kWh of electricity is the "real" inflation. The value of gold isn't "real" to me or most consumers.

[deleted]
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