historical gold

$672 and heading higher. Compared to the $850 peak in 1980 we still have a long way to go.

If one simply discounts for the CPI increase then according to the US Bureau of Statistics the measure of CPI has increased from 82.4 in 1980 to 195.0 in 2005. Thus the $850 maximum reached on the 21st of January 1980 would equate to about US$2011 per ounce in 2005 dollars.

However the US government has been fiddling with the CPI for so long it has lost much of its meaning. Many economists believe that the M3 money measure more clearly reflects the degree of inflation. The M3 measure has increased from $2000.0 billion in 1980 to $10,216.0 billion in 2005. In this case the $850 in 1980 would equal $4341 per ounce in 2005 dollars.

Of more long term interest, by the end of January 1980, gold had dropped back to about $650 per ounce, and maintained an average value of $610 for the rest of 1980 (Feb to Dec). It only subsequently started its long term decline. $650 in 1980 represents about $1538 (adjusted for CPI) or $3320 (adjusted for M3) in 2005 dollars.

Any guesses if the US continues to print money.

Cheers

Andrew