inflation correcting the inflation hedge??

Discussion in 'Gold' started by vintec, Aug 11, 2011.

  1. vintec

    vintec Member

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    hi all, I've got a question and please be gentle for my noobness :)

    I came across an article that says gold price is still below the 1980 high in terms of inflation adjusted dollar. It says that the $850/oz in 1980 is equivalent to $2400 in 2011 and that we have yet to break the all time high for inflation adjusted gold.

    I'm really confused as I have always thought that even though there are many factors that determine gold price, one of the factors is it re-adjusts itself based on the inflation of currency over time and thus, becoming a good inflation hedge. Do we need to adjust the price of the one thing that doesn't lie about its own value?

    Am I missing something or they were wrong in the first place by using the CP-Lie?
     
  2. jon999

    jon999 New Member

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    I think what they meant was, that there are x times more $ in sirculation now than in 1980, so the price of gold should be x times higer. That gold has not adjusted propporly to inflation.
     
  3. Aengrod

    Aengrod Member

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    in 1980, 850$ had the same purchasing power as todays 2400$ - simple as. Therefore buy silver! It's still below its nominal high.

    PS You can see that through 1980 - 1999 gold was fairly bad inflation hedge, going down to 200 - 300 ish levels.
     
  4. dccpa

    dccpa Active Member

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    Per John Williams at Shadow Government Statistics (SGS) the true inflation adjusted high is somewhere around 8000oz. John keeps the inflation statistics as they were before the last several presidents bastardized the statistics to create artificially lower inflation. I am sure his site has the true amount, but the 8000 is fairly close.
     
  5. Wout

    Wout New Member

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    yea they dont include housing, food, energy costs etc in the cpi figure anymore, basically anything thats gone up because of inlaltion doesnt get counted, its such bs and so many people have no clue
     
  6. vintec

    vintec Member

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    so it is fair to say that conventional wisdom/media got it wrong again by claiming that the current gold price is lower than the inflated adjusted price in 1980 because they do the inflation adjustment based on the flawed CPI (CP-Lie)?

    based on my understanding on the manipulated inflation figure and QEs, inflation adjusted gold price should have surpassed the 1980 peak easily
     
  7. Wout

    Wout New Member

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    correct, from memory if you calculate inflation the way they did in 1980 and earlier the inflation adjusted gold price is somewhere around $7,500

    thats just from memory so correct me if im wrong but yea definitely alot more than $2,400
     

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