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Gold hits all time high

goldprice.org

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Re: Gold hits all time high

#81

Post by tossandthrow »

jhrmnn wrote: post #76
tossandthrow wrote: post #62

Earlier quoted context omitted.

> Fiat money is not going down as much as asset prices are going up, though. How do you measure this? What is this claim founded in? You could indeed say that inflation should be defined by the asset prices. This would couple fiat and asset prices definatorically.

I’m guessing what was meant is that the price of things that are to be invested in is growing wrt the price of things that are to be consumed. Which naively makes sense to me in an economy based on growth where the total consumption starts to stagnate—the surplus still has to go somewhere. Is it so or is reality more complicated than that?

I think this is a key observation.

Apparently consumables have become incredibly cheap.

But then again, consumables will like start to rise in price now people need more money to buy a house, etc.

You could also say that real salaries have gone down a lot, which is probably also true.

These effects have to go through very complex value chains.

Re: Gold hits all time high

#82

Post by johnohara »

The price of gold fluctuated significantly in 1979 due to concerns over whether inflation could be brought under control. It started the year at ~$250.00 per ounce and ended the year at ~$850.00 per ounce.

It was a presidential election year and consumers were getting squeezed hard by rising energy prices. Russia invaded Afghanistan, Carter suspended participation in the Olympics, and there was a general feeling of concern.

Using Wolfram Alpha to compute gold's price in 1979 relative to 2025, "850.00 1979 dollars in 2025", the result is $3,663.84

Gold closed today at $3,858.60.

Just like 1979, 2025 has a long list of international concerns making investors nervous.

Re: Gold hits all time high

#83

Post by zahlman »

lottin wrote: post #58
paxys wrote: post #25

Gold, silver, stocks, real estate, Bitcoin, baseball cards, fine art, Rolexes - everything is trading at or near their all time highs. The value of the US dollar is simply going down.

As expected. This is why we don't use nominal dollars for measuring changes in prices over long time periods. It's meaningless.

Assets like gold are also reaching new highs in real terms, which is giving people reason to be skeptical of the adjustments made for inflation.

But really none of it is as objective as it tries to pretend to be.

Re: Gold hits all time high

#84

Post by pizlonator »

MountDoom wrote: post #75
pizlonator wrote: post #45

Earlier quoted context omitted.

Bingo So then the question is - how long can this continue before something snaps

Pretty long, given that the US had a fully-fiat currency for 50+ years, and many European countries had it for longer than that. Per CPI, your dollar is worth 8x less than what it was worth in 1970. This, in itself, doesn't mean anything profound. There's nothing to "snap" if the expectation of stable, modest inflation is baked into the markets. Fiat currencies usually implode only when something else undermines the…

The issue is that we're seeing asset price inflation that is far greater than CPI

In other words, we have two different inflations happening at once, leading to people who happened to own the right assets getting richer and everyone else getting poorer. I don't think that's what an efficient market would do, which implies that efficiency will kick in at some point and BOOM

Re: Gold hits all time high

#85

Post by laserlight »

nixass wrote: post #3

Other than for few years in mid 2010s gold seemed to be at ATH most of the time

That's a gross misrepresentation of reality. It gives the false impression that gold prices always increase, which is not the case. Gold is a volatile asset, i.e., it's a relatively risky investment.

It took 8 years for gold to recover from circa 2012 drop. 8 years is twice as long as S&P 500 took to recover from 2008 financial crisis. More importantly, see the 1980 high. It took 26 years to get back to the same point. Anyone considering investment should adjust their expectations accordingly.

Re: Gold hits all time high

#86

Post by zahlman »

MountDoom wrote: post #75
pizlonator wrote: post #45

Earlier quoted context omitted.

Bingo So then the question is - how long can this continue before something snaps

Pretty long, given that the US had a fully-fiat currency for 50+ years, and many European countries had it for longer than that. Per CPI, your dollar is worth 8x less than what it was worth in 1970. This, in itself, doesn't mean anything profound. There's nothing to "snap" if the expectation of stable, modest inflation is baked into the markets. Fiat currencies usually implode only when something else undermines the…

For that matter, the US recovered from the inflation of the 80s and avoided a serious hyperinflationary spiral of the sort seen in many less stable regimes, and when the real-terms price of gold spiked in 2011 it wasn't even accompanied by unusual levels of inflation.

Re: Gold hits all time high

#87

Post by tossandthrow »

onlyrealcuzzo wrote: post #71
paxys wrote: post #63

Earlier quoted context omitted.

> Fiat money is not going down as much as asset prices are going up, though. I'm assuming you are referring to CPI, but that is just a single measure of inflation and serves a very specific purpose. One could argue that "real" inflation in fact is the US dollar's value relative to gold or other similar assets.

If one was not someone who lived in the real economy and spent most of their money on things in the real economy, and instead was a billionaire, and spent most of their money buying future cash-flows, then sure.

This is an imprecise take, in particular due to one thing: Target return rate.

The rich people expect a return rate regardless of how expensive the asset was, and eventually the asset will have to give that. This transaltes into more expensive consumables, rents, etc. Ie, Asset prices are a part of the real economy.

Re: Gold hits all time high

#88

Post by zahlman »

pizlonator wrote: post #84
MountDoom wrote: post #75

Earlier quoted context omitted.

Pretty long, given that the US had a fully-fiat currency for 50+ years, and many European countries had it for longer than that. Per CPI, your dollar is worth 8x less than what it was worth in 1970. This, in itself, doesn't mean anything profound. There's nothing to "snap" if the expectation of stable, modest inflation is baked into the markets. Fiat currencies usually implode only when something else undermines the…

The issue is that we're seeing asset price inflation that is far greater than CPI In other words, we have two different inflations happening at once, leading to people who happened to own the right assets getting richer and everyone else getting poorer. I don't think that's what an efficient market would do, which implies that efficiency will kick in at some point and BOOM

> we're seeing asset price inflation that is far greater than CPI

Have a look at the CPI-adjusted gold chart, and think back to how awful things were (or weren't) in 2011.

Re: Gold hits all time high

#89

Post by vladimirralev »

ajross wrote: post #46
vladimirralev wrote: post #27

Good time to remind everybody that the Fed, the US central bank, prices gold at $42.22 for some reason and nobody questions it ever. And all those dignified educated respectable board members and econ PhDs give speeches about science-based market economy, maintaining credibility and staying away from politics while caring about the wellbeing of households and families.

That's wildly misunderstanding things. The fed doesn't trade, regulate, hold or sell gold. That price you're quoting is for a historical artifact called a Gold Certificate. These things have a value set by law (not by the fed) of 42 and 2/9th dollars. They don't sell them anymore, but if you happen to have one they're required to buy it from you (IIRC) at that rate. As always, Wikipedia: https://en.wikipedia.org/wiki…

It's a little bit broader than this. In the Fed there is the so called "statutory price for gold" and it's not limited to gold certificates. Any gold in the Fed would be priced at $42 by law. The fact that they don't technically own any gold and work around the issue only makes it so much more amusing. It only serves to tell people they can fix prices and make outrageous course-correction changes overnight and people will still argue "it's fine and it's legal" afterwards.

https://www.federalreserve.gov/data/intlsumm/current.htm

Re: Gold hits all time high

#90

Post by skybrian »

snickerbockers wrote: post #19

What is it about gold, anyways? None of its useful properties were known until recently (and mostly overhyped and upsold tbh, at least as far as those stupid cables go). Are we really just instinctively attracted to shiny metals? Or do people like it as a status symbol? (not to act like im above it all, i still have my gold-plated pokemon jigglypuff trading card from burger king in 1999 and i often use golden paint o…

Historically, gold was too expensive to use for everyday transactions (and still is) and most people (who were peasants) would never see it. So it seems like the sort of thing where prices are set by the rich, who can afford it.
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