Bullion Baron has done some work on this which is excellent. (with thanks BB)
http://www.bullionbaron.com/2011/07/wagegold-ounce-ratio-australia.html
Source:
I came to the idea of sovereigns because a sovereign a week could take care of a single retirees basic expenses (assume no rent, no extravagances but food, bills, rates, petrol, a cinema trip or two, a few meals out etc) and 2-3 sovs per month above that would add the "joie de vivre" - trips, indulgences etc that retirement is supposed to hold. (modest lifestyle but comfortable)- hence the search for sov/wages relativity.
But now looking at Bullion Baron's work I wonder if saving bullion sovereigns is truly the answer, or whether sets or single examples with numismatic value would be a safer way to 'save' for retirement, considering the variables associated with stacking bullion (including bullion sovs)
This data is from USA but the points are universal:
Source:
As measured by gold, the value of a day's wage reached its zenith in 1970, when those wages measured in dollars were a lowly $28! Although a day's wage more than doubled to $57 by 1980, their value, measured by gold, fell by 87 percent to just 13 percent of 1970s magnitude.
From this low point in 1980, wages again double to $118, while the value of those wages jump 4.5 times their 1980 lows. However, this gain only brings them to about 61 percent of the value they had in 1970. This gain also marks the top of the business cycle as the value of a day's wage again turns lower in our current depression falling to the present level.
In 1970, a day's wages could buy nearly three quarters of an ounce of gold; by 2010 those wages could only buy a little more than one eighth of an ounce of the metal. Your wages have quintupled since 1970, yet you actually have become poorer. If you are making the average hourly wage of $19 per hour, you are experiencing a level of poverty that was unimaginable to your grandfather, who made only $3.50 an hour in 1970.
Bolding is mine - so in effect the potential resale of your bullion could NOT be a good retirement plan. If you retired and sold gold to live in 1970 you'd have to sell a lot of your stack to pay for dinner. In 1980 you'd be dining out on a fraction of the gold you sold in 1970. So if you retire in the wrong decade, all that stacking could be to nought.
and more on the issue of variables:
*****
The value of a day's wage and the value of an ounce of gold how much of one can be exchanged for the other, their exchange ratio is, of course, subject to fluctuations arising from supply and demand, the business cycle, and improvement in the productivity of work.
If there is a shortage of labor power, we can expect it to trade above its value; if there is a surfeit of labor power it will trade below its value. During periods of economic expansion, we would expect it to trade at the upper end of these fluctuations; and contractions would lead it to trade toward the lower end of those fluctuations. Improvement in the productivity of gold producers might either outstrip or lag that of a typical basket of goods which compose a working class household budget.
From a coin seller:
Rare coins have significantly outpaced gold in the past 30 years, particularly during rising inflation. However, rare coins have not done nearly as well as gold in the past 10 years. Why? Simply because rare coins are driven by inflation and prosperity, two conditions that are in very short supply during disinflationary recessions like today's.
http://www.blanchardonline.com/beru/rarecoins.php
So, in contrast to Mike Maloney's viewpoint, perhaps if this is 'the great deflationary depression' unfolding worldwide, some numismatic value to your "retirement" sovs may be a safer hedge than pure bullion, especially since you have a floor to your savings being the gold price and numismatic premium will/should increase over time, whereas bullion value may not (see the 15 years of gold stagnation prior to 2000)
Or am I on the wrong track here?
