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Message:: [QUOTE="Cloudsweeper99, post: 1096539, member: 3011"]The answer is a little complicated.  On the one hand, a base rate of inflation is implicit in a fiat economy because the growth in money supply over time must be approximately the same as interest rates.  So there is always a tailwind pushing prices for everything upward.  Offsetting this are improvements in technology.  In mining, many of the technological advances and computer modelling have made drilling and mine construction more accurate, reducing costs.  But perhaps the biggest factor in producing precious metals is the cost of energy.  Some companies have reported that energy costs are as much as 40% of their total cost.  This probably drives the cost of production more than inflation.  And I know that energy costs are also subject to inflation, but they are perhaps more influenced by the increase in demand relative to the increase in supply.  Remember, we had a lot of cumulative inflation from 1980 to 2000 and precious metal prices declined over the same period, and the drop in energy costs was a big factor in keeping the cost of production, and hence the price, low.  So there is a relationship, but not dollar for dollar.  If the money supply is the primary or only factor you look at when evaluating a precious metal investment, you are almost guaranteed to lose money.[/QUOTE]