Posted on 04/29/2015 9:51:07 PM PDT by dennisw
If you’re someone who’s skeptical of government-reported numbers, you’ll find the following chart confirms your suspicions. And if you’re someone who’s attracted to value, you’ll love the chart.
There is a lot of criticism of the government’s CPI number simply because it doesn’t really seem to reflect what the average person experiences. Even with gas prices in decline, other segments of our society have seen prices accelerate. Healthcare and college costs are two biggies, rising far more than the current 0.2% reading. And many food items have scary trajectories—ground beef has more than doubled since 2010.
Meanwhile, the gold price has fallen by roughly a third over the past three-plus years and been flat for the past four to five months. But is it a good value at current prices?
Since 1980, the CPI formula has been modified at least a dozen times. Heck, they even implemented a new “estimation system” this year. Most nongovernment economists (like you and I) think those changes have made the reading less accurate, not more.
So I asked John Williams of Shadow Stats to calculate the gold price in March 2015 dollars (the latest data available)based on the CPI-U formula from 1980.
Here’s what he found.
Adjusted for the 1980 inflation measure, the gold price is approaching its bear market low of 2001. In fact, gold is now below the 1975 price when it became legal to own it again!
These data clearly show that when measured against a more realistic view of inflation, gold is dramatically undervalued.
And with total worldwide debt levels up by a whopping $57 trillion since the end of 2007, the need to own it is as important as ever.
Don’t worry about the current rangebound price. Buying now represents tremendous value and tremendous protection against the next economic crisis.
You can add that protection to your IRA with six months’ free storage at the Hard Assets Alliance with a risk-free trial toBIG GOLD. Depending on how much you buy for storage, you could even pay for your subscription with the savings. Now is the time to make a move to protect your future purchasing power, while gold prices are down. Get started here.
Shadowstats, lol.
HA! I bet Glenn Beck is sad.
Nothing says it can’t go lower.
Interesting
You got to be kidding! If I am going to purchase precious metals, they are darn well going to be delivered to me for safe keeping. Sheezham.
Plus - I always thought that was another good reason to hold gold - it keeps it's value in inflationary times. Isn't that what the chart says?
And - I'm a bit suspicious of them using 1980 as a base, and that just so happens to be the highest value on the chart.
all the money has moved into the stock market. there’s no demand for Gold when stocks are booming. The question is, how long can this boom be sustained?
Well, 1980 was during the period of the great inflation. We were headed down the path toward economic crisis. A nation can not long survive rampant inflation.
The purpose of holding precious metals is to guard against loss of buying power during times of inflation, when wages are not keeping up.
That peak shows what happens when inflation is high - Gold was high too, but the paper currency was being devalued.
Speculators might do some arbitrage and make some quick profits, but if they sell their entire stock of precious metals, they have sold their insurance against economic crisis and inflation.
Gold is at an all-time high with respect to the only commodity that matters in today’s world: computation. You can buy more GHz, gigabytes of memory, gigabytes of storage, and megabits of bandwidth for one ounce of gold than at any other time in history.
>> if they sell... they have sold their insurance against economic crisis and inflation
There are more productive and enjoyable ways to ensure against economic crisis and inflation than owning gold.
Use your gold to buy and improve land, and purchase tools for self-sustained living.
Or buy firearms and ammo. :-)
Or both, what the heck.
Which is funny, because he doesn't actually use the CPI-U formula from 1980. Or any actual calculation of CPI using prices of stuff.
Going to $1,000 or slightly less.
As for enjoyment, that is of course an individual matter. Now I love my yard, and gardens. I love my wooded 22 acres, though I don't get out to explore them as much as I'd like.
I'm also glad for all the tools we have accumulated, because we rarely have to buy anything like that anymore (I'd love them even better if they were a little more organized).
Somehow though, it's a bit of a different sort of enjoyment as I look upon my meager collection of gold jewelry. My wedding rings, rings inherited from my mother and grandparents etc., but oh how I enjoy the clink of silver dollars.
My grandpa called them big nickles. He used to give me one or two every birthday and my Granny told me to be sure and save them. Once I asked my Mom why they had them and why Granny said to save them. She told me, it's in case the currency becomes worthless.
I was only five years old at that time. Her statement left me stunned and a little confused, but I knew better than to pursue it further. When Mom explained something using “the tone” that meant here's your answer - end of discussion.
So every time I look at those coins, I can see them all Granny, Grandpa, Mom, and Dad all standing around watching me with big smiles on their faces. Now to me - that silver is priceless. I'll keep it forever and leave it to my kids and grand kids - if I never have to use it take care of them in a time of crisis.
>> So every time I look at those coins, I can see them all Granny, Grandpa, Mom, and Dad all standing around watching me with big smiles on their faces. Now to me - that silver is priceless.
That’s a wonderful story. Thank you for sharing it; it brightened my morning. It would be hard to part with that silver no matter what kind of currency crisis hits!
You are welcome. Always glad to bring a little sunshine to the day.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.