The author insists that the current gold price is now cheaper than 1980 - Economics
The author insists that the current gold price is now cheaper than 1980 - Economics
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While Gold is generally considered the best inflation protection, a report by the author Kelsey Williams has now questioned this long -term claim. In the report, Williams argues that the current gold price of around $ 1,810 per ounce is much lower than the average price of the raw material in 1980.
gold price increase lags the inflation
Williams' statements indicate that the value increase rate of the yellow metal has remained behind inflation in the past 41 years. In a test report The author uses nominal and inflation-adjusted Gold prices to illustrate this point.
According to a table published in the report, the nominal gold price is located, for example, on an upward trend of $ 664 per ounce in February 1980 to $ 1,825 in August 2011. However, February 1980 prize that is the fastest to $ 2.309 compared to the price of August 2011, which is
A similar trend can also be observed in August 2020 when gold recorded its all -time high of USD $ 2,070. The same table shows, for example, that at a time when the price in August was USD 1,970, the inflation -adjusted price of the raw material is actually
Why Gold Real drops
This illustration of Williams could mean that investors who have traditionally received positions in gold do not actually get the best protection. The author himself comments on why the gold price has dropped real. He said:
Since the gold price, which is higher over the course of time, reflects the continued loss of purchasing power of the US dollar, it is not to be expected that it will not exceed earlier price tips. Likewise, it is not unreasonable that it corresponds to the tips. The only factor that probably prevents the gold price from reaching previous price tips is that the total effects of inflation of the Federal Reserve still have fewer and fewer effects.
Although the author does not suggest a better alternative value storage to gold, the report shows that gold could not keep up with the rate of deterioration in the dollar.
Do you agree what Williams said about the gold price? Tell us your opinion in the comments below.
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