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Gold prices are hitting records

wsj.com

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Re: Gold prices are hitting records

#51

Post by fatherzine »

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.

prices, of all goods, inflate exponentially

the relative value of specific goods fluctuates within a small constant

in the long run, the exponential dominates the linear

----

thus the price of gold is a yardstick of the exponential inflation of prices, irrespective of the relative fluctuations of gold vs food vs energy

Re: Gold prices are hitting records

#52

Post by latchkey »

jaktet wrote: post #45
gnicholas wrote: post #24

How does this track with bitcoin prices, out of curiosity? (Full disclosure: I own neither!)

BTC has drastically outperformed gold over last 10 years but is also extremely volatile https://inflationchart.com/gold-in-btc/?logarithmic=1

Zoom out a bunch on the gold price chart and you'll see it is volatile as well.

Re: Gold prices are hitting records

#53

Post by darth_avocado »

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.

We can arbitrarily pick data points to prove a thesis, but that’s only one item. It is incredibly cheaper to do pretty much everything right now than it is during the Roman times.

https://news.ycombinator.com/item?id=30653366

Re: Gold prices are hitting records

#54

Post by pjc50 »

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.

Even the Romans had problems with debasement of the silver currency. As well as the real problem of a metal currency: specie shortage making it difficult to do large transactions at all sometimes.

Re: Gold prices are hitting records

#55

Post by mynameishere »

ortusdux wrote: post #16
Dig1t wrote: post #3

Earlier quoted context omitted.

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

Gold is generally considered a hedge against inflation. https://www.forbes.com/advisor/investing/gold-inflation-hedg...

There are many hedges against inflation. Gold is more akin to a hedge against catastrophe. Unlike commodities or industrial shares, gold can be hidden and transported personally.

Re: Gold prices are hitting records

#56

Post by TheRealPomax »

ramboldio wrote: post #35

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

Note that "stock prices" don't exist as a generalized statement. Individual stocks exist, and some of those may be at a record high, but most stocks aren't. Are you thinking of "these are the highest value companies we could aggregate" index funds, like the S&P 500 or the like?

As for the answer: because any unregulated commodity market will see that commodity priced based on demand, and demand creates demand.

Re: Gold prices are hitting records

#57

Post by DylanBohlender »

foobarian wrote: post #40
echelon wrote: post #5

Does this as an index track global anxiety?

I wonder if there is concern about the incoming boomer peak selloff, i.e. the larger than proportional age group coming into retirement and about to (presumably) sell off a bunch of indexes/stocks in their 401ks. Not sure what else could be a good hedge.

Different generations have different investment preferences, so the best hedges are going to be things Millennials want that Boomers do not typically own.

Re: Gold prices are hitting records

#58

Post by pjc50 »

AdamH12113 wrote: post #48
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…

> there's a tendency to abuse these kinds of facts to construct neat little narratives about currency

People really want to simplify a complex system into a short tale which wraps everything up with a little bow on top and blames it on their enemies. Not exclusive to goldbugs, though.

Re: Gold prices are hitting records

#60

Post by anonymous_sorry »

mynameishere wrote: post #55
ortusdux wrote: post #16

Earlier quoted context omitted.

Gold is generally considered a hedge against inflation. https://www.forbes.com/advisor/investing/gold-inflation-hedg...

There are many hedges against inflation. Gold is more akin to a hedge against catastrophe. Unlike commodities or industrial shares, gold can be hidden and transported personally.

Is it these sort of buyers that have a major influence on the price though? (I don't know the answer.)

If you buy a large amount of gold on an exchange the physical gold often stays in the exact same vault, and someone just updates an ownership record.

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