Gold vs. Paper Money
gold nuggets
The value of paper money against gold, in the last 100 years has declined by 98%. eg. In 1910, $1,000 bought 40 oz. of gold at $25 per oz. Today in 2010, $1,000 buys 0.80 oz. of gold at $1,230 per oz.
Gold has gone up 5 times since the 1999 bottom at $250, it is nowhere near it’s peak of $7,200 (real inflation adjusted) of 1980. So gold could easily go up 6 times from the current price of $1,220 and still be within normal parameters.
So, where is the bubble? Gold? Or in the amount of paper it now requires to purchase an ounce? Plain to see for me.
Mother Lode gold nuggets
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The question is, how much of gold is a hedge against inflation, and how much of gold is just another commodity, subject to the same fate as all other commodities over the last few months? What is the percentage, and how do we calculate it? I’m sick of hearing about how the price of paper money is manipulated.
Crystalline gold