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Message:: [QUOTE="Tejas, post: 7836619, member: 84905"]True, that is what you get if you express the value of gold in terms of dollars. This way, it is is impossible to say what has taken the "wild swings", gold or the dollar. There are two ways to fix this: 1. Express the value of gold in terms of "real", i.e. inflation adjusted, dollars. This will yield a much "smoother" series, with the gold price peaking in about 1980. However, it will show the substantial decline in the value (ie. the purchasing power) of the dollar over 50 year. There is no getting away from that. 2. Express the value of gold in terms of a real asset like another commodity or houses. I.e. to ask how many ounces of gold does it take to buy a barrel of oil, a house or a ton of copper. Again, you will find that the real value, i.e. the purchasing power of gold was a lot more stable compared to gold expressed in dollar terms. Another point to make is this. With the abandoning of the gold standard gold was de-monitized, i.e. no longer used in payments. Instead, gold assumed a role as insurance against severe crises. This has made the value of gold more volatile, because in every crisis investors rush to gold which drives up prices. Conversely long periods of de-monitization, when central banks sold their gold reserves put downward pressure on the gold price. If gold is used in the monetary system to back a currency, its value will be automatically stabilised.[/QUOTE]