What is the current value of Gold in 1970 dollars

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I'm no economist but I do remember something in an economy class at college about the time value of money. If gold is currently selling at around $260 an OZ. What would this be in 1970 dollars.

Buying on the dip.

-- Guns, Grub & Gold (The End@the World.com), July 08, 1999

Answers

In 1978 dollars you'd have to cut the current price in half.

The problem with going earlier is it is hard to estimate inflation during this period. The conventional means of determining price inflation does not necessarily track the true expansion of the money supply well. The gold bottom in the mid 1970's was at about $102. we'll assume that $260 works out to about $130 in mid 70's dollars.

Remember that prior to this the US dollar was convertible to gold (if you happened to be a foreign central bank) at the rate of 1 ounce to $35. This rate had been held since WWII, korea, vietnam, despite the enormous increase in money supply. In the early 70's the US stopped these foreign central bank dollar redemptions and the world went to floating currencies.

Prior to the $102 low, the previous high was around $194 about 12 months earlier. Just two years before that, the "official" price was $35. (it was technically illegal to own gold at that time)

The previous time gold was at a $257 low was only a few years later in 1977-78.

Because of changes in technology and so on it's hard to compare things like wheat, watches and gold. Gold is more constant, the per capita supply (ounces of gold per human on the planet) is fairly constant. Watches have become abundant, and cheap.

The dollar is very strong compared to gold right now, riduculously so, just as the dollar is weak compared to any of the stock.com's

Gold is REALLY cheap right now. BIG SALE! Go out and buy some "while supplies last"

-- binky (binky@binky.com), July 08, 1999.


You have to track gold in both inflated (price at the current time) and in constant (un-inflated dollars) over a long period of time (hint: use a graph) for any reasonable analysis. Just looking at one or two points doesn't show the real impact.

For a real fun time, put the price of a barrel of oil in the same graph. Then add the D_J average too.

-- Robert A Cook, PE (Kennesaw, GA) (cook.r@csaatl.com), July 09, 1999.


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