Gold value

A lot of CCF folks have predicted $2,000 - $3,000 gold, and while that seems incredulous to me, the stock market has become such a giant casino, and there seems to be so much bad news that has not been cared for (U.S. debt, European fiscal disaster), I'm just not so sure anymore.

Noop, gold doesn't move in value. Paper money moves up and down in relation to it. I expect gold to go much higher.

No, gold is not over-valued. Comparing the "price" of gold, which has intrinsic value, to that of fiat currency, which does not, seems like an apples to oranges comparison.

The US dollar has been printed in VAST quantities, whether that be as paper currency or as digital ones and zeros within the Fed and bank computers. Economics teaches us that there is a relationship between value and quantity. If we go from $2 trillion in money supply to $4 trillion with no other changes in the economy, each dollar reduces in value and tends towards being worth 1/2 as much as before.

The US dollar has lost over 95% of its purchasing power in the past 100 years. Since the government and the Fed will continue doing the things that caused this to happen, we can expect more losses in purchasing power as time goes by. This is why a lot of people buy gold and silver. While their prices vary with time, as measured in fiat currency terms, they do tend to hold onto their purchasing power. While nothing is perfect in this regard, gold and silver are about as close to it as anything else invented by Man.

A good way to overcome this fiat currency bias in gold and silver prices is to compare these metals to something else that is of intrinsic value, such as barrels of crude oil or gasoline. There are charts on-line that you can look up via a web search on this. There are also charts of the US stock market Dow 30 Industrials as expressed in terms of ounces of gold. This chart shows MUCH more clearly how the value of the US stock market varies with time. At the same time that the market was "rising" in fiat terms a few years ago, it was falling in terms of oz. of gold per Dow share. As it turns out, the Dow vs. gold chart was a far more accurate statement of the health of the US stock market and the economy.

I try to remove the dollar value associated with PMs when I consider it's relative worth.

I consider what it took in worked hours to buy that ounce of gold / silver. To do that I reference median yearly wages against a standard 40 hour work week. (this works until you try to look before 1938, of course)

Take the median salary (not average), divide it into an hourly wage. (not accounting for taxes)
Take monthly average gold / silver prices (non inflation adjusted).
Divide the price per ounce of gold / silver by the median hourly wage, this gives you number of hours the typical person had to work to afford that 1 ounce.

I find this to be a better indication of relative value than purely dollar amounts.

I haven't gathered everything for Gold yet. But I Have for silver.

http://www.sudobox.net/extra/Agfordayworked.html

this topic (http://www.coincommunity.com/forum/...whichpage=2)

This graph is made to show on the bottom line, how many ounces of silver you could earn in one day for 8 hours worked.

One of the problems with asking these sorts of questions is that no one seems to have all of the data in one place. This bothered me so I created a spreadsheet for my own analysis.

In my massive spreadsheet, I have daily gold, silver, Dow, and S&P 500 values from 1968 to the present. From 1974 to the present, I have annual CPI-U and wage statistics. If you want to know how the gold/silver price ratio has changed over time, or how the Dow/gold or Dow/silver ratios have changed, or what the purchasing power of an annual income in terms of gold or silver is, all the data is there.

Making graphs from the data is easy as long as you know how to do it in Excel. Some are very interesting. Hopefully you guys find this as useful as I do Sorry for the file hosting link, I'm not sure where else to upload it.

http://www.filehost.ws/b7bxfpfasvr7

Interesting chart, coin1024. That means annual income in dollars would have been around $128,000 circa 2000 by today's gold price value but only about $16000 in 1980.