Posted on 09/30/2025 10:11:47 AM PDT by delta7
Since 2007, major currencies have lost roughly 85% of their purchasing power relative to gold.
Whenever gold rises and I get excited as a gold investor, I’m often met with the familiar refrain: “Gold isn’t really going up, the dollar is just losing value.” I used to brush that off as a cliché or a game of semantics, and honestly, it annoyed me. But over time I decided to dig deeper. I started analyzing the data visually, which is my favorite way to learn, and that’s when it finally clicked. They were right. Gold wasn’t truly soaring; fiat currencies were quietly eroding. Since then I’ve made it a mission to help others see this clearly too, using compelling charts that drive the point home. That’s exactly what I’m going to show you today.
Let’s begin with a clear visual. The chart below shows gold’s performance since 2007 across several major world currencies: the U.S. dollar, euro, British pound, Swiss franc, Canadian dollar, Japanese yen, and Australian dollar. While this isn’t an exhaustive list of global currencies, it offers a solid and representative sample to support the points I’ll be making throughout this piece. As the chart reveals, gold has surged by around 450% in most of these currencies, with gains ranging from a low of 270% in Swiss francs to a staggering 748% in British pounds.
Next, I’ll present the same data from a different perspective. This time, I’ll highlight the purchasing power of each currency relative to gold, or in other words, how much physical gold each currency could buy over time.
Since 2007, the major world currencies featured in this report have lost approximately 85% of their purchasing power when measured against gold. On the low end, the Swiss franc has declined by about 73%, while the British pound has suffered the most, with an 88% loss.
This chart offers compelling visual evidence of a critical truth: it’s less about gold rising in value and more about fiat and paper currencies losing purchasing power at an alarming rate.
So why are we using gold as the yardstick? Because it’s the most reliable monetary yardstick in history. For over 6,000 years, gold has served humanity as the premier form of money and store of value. While it temporarily fell out of favor starting in the 1970s, it is now making a powerful comeback as the world begins to recognize the deep flaws in our fiat money and monetary system.
These flaws have led to rampant inflation and growing financial instability. That is why people around the globe are turning back to gold in increasing numbers, helping drive its price to more than double over the past five years. In my view, this move is still in its early stages.
If you’re skeptical about using gold as a yardstick for measuring currency purchasing power, rest assured that its decline is confirmed by other metrics as well. The most widely used is the Consumer Price Index (CPI), which tracks the average change in prices over time for a fixed basket of goods and services.
I calculated the average CPI for the major world currencies referenced throughout this report and found that, on average, they’ve lost 33% of their purchasing power since 2007. The resulting chart closely mirrors the gold-based purchasing power chart shown earlier, with the steepest declines occurring during two key periods: 2007 to 2012 and 2020 to 2024. Both of these were periods of heavy monetary expansion during recessions or crises.
Now, I realize there’s a noticeable discrepancy between the roughly 85% loss of purchasing power when measured in gold and the 33% loss indicated by official CPI data. My working theory is that this gap exists because CPI figures rely on government-reported statistics, and governments have a well-documented tendency to understate inflation in order to make their currencies and economies appear stronger than they actually are.
Most people have noticed that the price increases they experience in the real world don’t line up with the tame inflation numbers coming from economists in ivory towers. Personally, I trust what gold is telling us, and it is saying that official inflation metrics are understating reality. When it comes down to it, I’ll err on the side of gold.
Another likely explanation that can coexist with the previous theory is that savvy players such as central banks and hedge funds, who have superior access to information and a far deeper understanding of the global macroeconomic, fiscal, and monetary situation, have dominated gold buying and have been the main drivers of the gold bull market in recent years, with relatively little participation from retail investors.
Their actions indicate that gold’s surge is not random but is likely anticipating much higher future inflation as a byproduct of today’s excessive global debt levels. That debt burden will almost certainly require aggressive debasement of fiat currencies in the coming years. In this scenario, the inflation reflected in the price of gold is likely leading the official inflation that eventually appears in consumer price indexes.
Now let’s examine why currencies steadily lose purchasing power over time: inflation, or the persistent rise in the cost of living. It’s important to understand that inflation isn’t fundamentally caused by wars, tariffs, supply shocks, strikes, droughts, or energy crises. These factors may contribute to short-term price spikes, but they are not the underlying driver.
At its core, inflation results from the debasement of currency. In other words, it is the dilution of a currency’s value through creation of new money. As Nobel Prize–winning economist Milton Friedman famously said, “Inflation is always and everywhere a monetary phenomenon.”
As the chart below illustrates, the global M2 money supply, one of the most widely used measures of total currency in circulation, has surged by 205% since 2007, rising from $38 trillion to a staggering $115 trillion. This massive expansion of the money supply is the driving force behind the soaring cost of living worldwide and a key reason why the price of gold has surged in every major currency across the globe.
The next chart demonstrates how gold’s price closely tracks the growth of the global M2 money supply over time. This is the primary reason why gold remains the most effective store of value and hedge against inflation.
Although nearly everyone alive today has lived their entire lives in a world of persistent inflation, it’s important to understand that this condition is not an inevitable feature of life or capitalism. Instead, it’s a direct consequence of fiat money or paper currencies that are not backed by gold or silver as they were prior to 1971.
Once the world abandoned the gold standard, which was the practice of backing currency with gold, governments and central banks gained the power to expand the money supply without restraint. And that’s exactly what they did. The result was a relentless rise in the cost of living.
If you’re interested in exploring this topic further, including some fascinating long-term data showing how the U.S. dollar has lost 97% of its purchasing power since 1913, be sure to check out this report I wrote.
Bkmk
“The Dollar is losing value every day, sure wish Trump would stop that...”
Trump cannot stop it, in his first term he helped the downward spiral, Biden made it much worse and today we are basically screwed.
Sometimes I wonder where we will be in 10 years, but I don’t really want to think about it.
It won’t be 10 years, Day of Reckoning is coming faster than you think.
We currently are paying over $1.1 Trillion on the Debt with the Debt continuing to rise at a fast pace, now we are at $38 Trillion and by the time Trump leaves office it will be around $44 Trillion or more, depending on whether we go to war in Venezuela and a full blown war in the Middle East against Iran, then we may go to $50 Trillion.
The problem we will have is paying interest on the Debt and finding buyers for our Debt. will the Federal Reserve be the buyer of last resort, i.e. we buy our own debt.
Add in Military Spending and Health Care spending, already out of control, and we are out of money.
Health Care, Military, and Interest eat up almost $5 Trillion of a $7 Trillion Budget right now, and they are growing, soon there won’t money for anything else.
So we either balance the budget, Austerity Budget coming, or we default on debt and the government collapses and the country breaks up.
It won’t be 10 years, Day of Reckoning is coming faster than you think.
We currently are paying over $1.1 Trillion on the Debt with the Debt continuing to rise at a fast pace, now we are at $38 Trillion and by the time Trump leaves office it will be around $44 Trillion or more, depending on whether we go to war in Venezuela and a full blown war in the Middle East against Iran, then we may go to $50 Trillion.
The problem we will have is paying interest on the Debt and finding buyers for our Debt. will the Federal Reserve be the buyer of last resort, i.e. we buy our own debt.
Add in Military Spending and Health Care spending, already out of control, and we are out of money.
Health Care, Military, and Interest eat up almost $5 Trillion of a $7 Trillion Budget right now, and they are growing, soon there won’t money for anything else.
So we either balance the budget, Austerity Budget coming, or we default on debt and the government collapses and the country breaks up.
Western Fiat Currency countries are slowly collapsing.
China, India, Russia are aligning their currencies back by gold and basket of hard assets for trade payments. This is the key to the rise of BRICS and why all growth will be in Eurasia and Asia for the next 100 years, they are evolving and we are sinking.
The Dollar as a reserve asset is becoming obsolete. Less countries are going to buy our Debt and we can’t continue to spend and refinance.
Unfortunately, gold does not earn interest and is too cumbersome for routine consumer and commercial transactions. In addition, gold has serious drawbacks as a monetary base because it is subject to manipulation. Read the history of Fisk and Gould’s gold squeeze during the Grant administration, and of the similar ill effect of US and French gold accumulation policies during the 1920s and 30s.
Go read Karl Denninger. market-ticker.org.
You may have to poke around his site.
It’s CMS. Medical spending has gone from 5% of GDP to 20%.
If we revert that, we balance the budget.
Here is a link from around 8 years ago:
https://market-ticker.org/akcs-www?post=231949
As an aside, he has a measured IQ of 187. He is not merely blowing smoke to hear himself talk.
...Salty language though.
Oh, and again with the language, from this afternoon.
https://market-ticker.org/akcs-www?post=254125
Oh Man what fantasy stuff.
Oh Man what fantasy stuff.
Oh Man what fantasy stuff.
“depending on whether we go to war in Venezuela and a full blown war in the Middle East against Iran, then we may go to $50 Trillion.”
What are you smoking? You obviously are not embedded in reality.
“It’s CMS. Medical spending has gone from 5% of GDP to 20%.
If we revert that, we balance the budget.”
Our total governmeny spending is 23% of GDP.
Round numbers.
You did it wrong.
$1.45 in 1970 is worth $12.43 in August 2025.
Your link is "productivity", not inflation.
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