The purchasing power of gold vs. inflation

Discussion in 'Bullion Investing' started by Herberto, Jan 5, 2022.

  1. GoldFinger1969

    GoldFinger1969 Supporter! Supporter

    Went to $2 a gallon as the Iraq-Iran War commenced.
     
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  3. chascat

    chascat Well-Known Member

    Gas was 30c in 1973, 45c in 1974, yes...up in 79, and in 88 back below $1. When recession started in 90, gas was way up, then down to around $2 by 97. Way back up again with the Gulf War, then down again in the mid 2000s. Way back up with the recession of 2009, then back to $2 -$3 until recently. Should be at $4 or more to follow the inflation rate...be glad we don't have to pay European prices at over $6.
     
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  4. Captain Sully

    Captain Sully Active Member

     
  5. Captain Sully

    Captain Sully Active Member

    https://www.themorganreport.com/https://www.themorganreport.com/
     
  6. manny9655

    manny9655 Well-Known Member

    In Lebanon I hear it's around $11.00 per LITER. Remember that a liter is approximately a quart.
     
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  7. JD Bartlett

    JD Bartlett Member

    In 1973 my Southern California house cost $39,000 (it was just over 1 year old at that time), and $39K checked on the inflation index for 2021 is just over $244,000. Thats about 527% inflation. The house is now in the $550K - 650K range if sold today.
     
  8. imrich

    imrich Supporter! Supporter

    Based on my humble experiences, the dates/type/mints/grades postings of the various denominations have significantly been reduced.

    We are often seeing overgraded? generic listings as the total offerings (e.g. 1924 MS61-62 "toned"/bag-marked-rubbed/worn $20s, etc.) @ elevated pricing.

    I've had one VERY prominent seller chastise/admonish me for ordering his best offerings, in his perceived absence.

    He finally refused to accept my orders. In my opinion, sales loss of over-priced scarce coins, remaining unsold.

    JMHO
     
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  9. crazyd

    crazyd Well-Known Member

    Hmmm.. did some looking. When I graduated college (1988) I got a new car for $12,500. Last year we paid about $36000 a new hybrid CR-V. However a similar sedan would have been $28,000. So lets say 2.5 times the cost for a new car. The Stock market value is 17 times higher. My home has increased about 5 times the price. My income is 6 times higher than when I graduated. Much of this (especially home prices) varies greatly by where you live.
     
    Last edited: Feb 1, 2022
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  10. mpcusa

    mpcusa "Official C.T. TROLL SWEEPER"

    BTC has always been a good friend for
    one reason only, it makes me money :)
     
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  11. Gam3rBlake

    Gam3rBlake Well-Known Member

    I want gold & silver to both drop at least 50%.

    Now I’m sure a lot of people would disagree with me but for me personally I want to buy more gold & silver.

    For the older people who may be planning to cash out and retire I imagine they want gold & silver to sky rocket.

    I don’t plan on ever becoming rich or anything with gold & silver I just see it as an alternative store of wealth to US Dollars.

    Although I do keep USD & stocks too. Diversification is important!

    For the last couple of decades though the US government has been spending more and more and printing more and more money and making existing dollars worth less via inflation.
     
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  12. Mammothtooth

    Mammothtooth Stand up Philosopher, Vodka Taster

    Buy value and dividend stocks and sit on it….
     
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  13. GoldFinger1969

    GoldFinger1969 Supporter! Supporter

    I get that.

    I don't think it happens, though. Barring some economic downturn, I think gold and silver have 15-20% downside, tops.

    OTOH, 2 of these Fed Governor nominees are totally unqualified for the Fed and FOMC. You could have gold skyrocket in a week if their political leanings spark a crisis.
    But the dollar is the global reserve currency and other nations have had their currencies weaken more.

    Also, the velocity of money has fallen and this has offset big increases in the monetary aggregates.
     
  14. MDO

    MDO Active Member

    I bought an oz of gold on May 29, 2020 and paid $1830 about $100 over spot. I closed on my house the same week at a cost of $388,500.... Today gold is at $1901 and my house is worth $576,900 (based on recent sales) with a $30K increase in the past 30 days (doesn't matter anyway because I'm not selling) .... plus my realtor thinks it will bring an additional $25K in a bidding war..... Gold may drop in the future as it does fluctuate but real estate in the right zip code only goes up and is a safer bet....but I still buy at least two ounces of gold each year....
     
  15. Gam3rBlake

    Gam3rBlake Well-Known Member

    Gold is fungible and liquid though. Unlike a house.

    It can be sold immediately with minimal loss in value.

    It’s true a house can also be sold. Usually not immediately though and if an attempt to sell immediately is made the price received would be much lower.

    I mean try selling you house for $576K in 24 hours. You’d have trouble.

    In other words even if someone has a house truly worth $1 million it will take some time to get that $1 million if needed.

    But if someone had $1 million in gold they could sell it immediately on the spot.


    Both gold & real estate have pros and cons but I just wanted to point out some differences.
     
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  16. MDO

    MDO Active Member

    I could sell my house in less than 24 hours at $525K-$550K cash sale because of the demand in this zip code and close in 10 days.... That's pretty liquid to me. If I really really need liquid, I can withdraw cash from my savings faster than you can sell your gold and receive payment.
     
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  17. GoldFinger1969

    GoldFinger1969 Supporter! Supporter

    Except you have to live SOMEWHERE....need to wait for title searches...closings....buyers back out on close day....moving contents out....etc.
     
  18. -jeffB

    -jeffB Greshams LEO Supporter

    Thing is, the liquidity of any particular asset can vary over time. Like @MDO, I live in an area where housing is going insane -- Apple is opening a facility that will hire around 3,000 people at salaries averaging something like $180K, and the median household income here is $59K.

    But it was only a few years ago that houses here would sit on the market for months with no activity.

    Then there are cars. This morning, I finally saw the news I'd been expecting -- for many car models, in many areas, the price of a used car is HIGHER than the cost of a new car. The catch, of course, is that you can't find those models new. It's a great time to sell your car! Except you still need transportation.

    Gold's liquidity is probably more steady. Yes, there will always be someone ready to sell you gold, or buy your gold. But the amount you can get for your gold, or the amount you have to pay for more, at a shop in your town, will fluctuate a lot more than the spot price.
     
  19. John Burgess

    John Burgess Well-Known Member

    paid 79K for my house in 1987 on a mortgage, it's the largest floor plan in my community at just over 2K square feet. One that have sold recently down the street was asking for $279k, and many bidders, and a bank offered them $71K over ($50k over the highest bid) to get the property.
    No idea why.....

    Mostly they are selling around $270-$325K right now, it's mostly businesses and banks doing the buying, looking to tie up excess cash into property, I guess as a hedge against inflation, same way we use silver or gold but a bigger ticket item.

    inflation is necessary, deflation or stagnation is REALLY bad. if inflation outpaces wages and costs rise too fast it hurts. but it is what it is. there was a major contractionend of 2019-2020. the rapid growth of demand will cause these issues, just kind of have to ride it out and weather it and it will all balance out again.

    And to be completely fair about it, a lot of this has to do with tariffs on imports being handed down to consumers. it's not forcing domestic supply increase, or china to be better trade partners, it's just forcing a hand deeper in everyone's pockets.

    How great was it first quarter 2020 when we had near 0% inflation. It wasn't so hot for me, I tell you what.

    my opinion, yeah, everything goes up over time, gold, milk, bread, houses, silver, cars, whatever you buy, either it gets smaller or prices go up, or they add "new and improved", a business needs to do better this year than last year, a worker needs to do better this year than last year, if it's all on pace it balances nicely, when it gets out of wack, it stresses everything.

    Where were all the people praising the low gas prices in first quarter 2020? Yeah, they were all working from home or jobless looking for stimulus money to pay rent and nowhere to drive to.
    Now that demand is back up so is the gas price. Producing more to sell to the world market doesn't correct the issue either domestically, not for us, but that's capitalism. Heck they will sell it to another country then buy it back just to raise the price.
    We all know wages have been held back a really long time not keeping pace with inflation or the Consumer Price Index.
    $100 in 1913 is $3.87 today. NONE OF US, have seen it "good" if we were born after 1933. From 1983 until now that $100 in 1913 had the buying power of less than $10.

    Anyways, a 3.51% inflation rate means $100 in 1933 is equivalent to $2162.68 today... I'd say gold is in the neighborhood of where it ought to be now. A new house modest house in 1933 cost $5750, that puts a modest house in the range of $150K today, an average care in 1933 was $600, today that would be about $15,600. also seems about right BUT there are demand spikes at play also.

    Not sure where I am going with this, I'd say "it's transitory" and it will balance out in time, but I'm sure someone will call baloney on that. but the reality is, the stock market can't go up forever into infinity, and the money supply can't grow into infinity either, and neither can the CPI or inflation.
    Oh yeah. If you had a $100 bill in 1933 its worth $3.87 today in buying power.
    if you had $100 in gold in 1933, you'd still be doing well today on it, instead of $3.87 buying power, it would have... $1900 buying power, but still be less than it should be I think by around $200 or so.
     
  20. -jeffB

    -jeffB Greshams LEO Supporter

    I think you're saying "$100 in gold" when you mean "$20 in gold". $100 in gold would've been a bit less than five ounces.
     
  21. John Burgess

    John Burgess Well-Known Member

    yeah, I was rushing on my train of thought and typing. you are correct, it would be like 5 ounces for $100. thanks. now the whole post is wonky with the mathematicals. :D I was comparing an oz of gold vs. $100 bill. an oz of gold in 1933 was like $26 or so.
     
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