Cars and Homes Prove Gold Preserves Buying Power
A commentary on recent events by National Gold Group’s Michael Carr – November 21, 2012
Because of inflation, everything seems to cost more today than it did years ago. This is true in dollar terms but is not necessarily true when items are priced in gold. For example, a new car cost about $360 in 1917 but could easily cost more than $32,000 today. Gold has also gained in price over that time, rising from about $18.50 an ounce to more than $1,700 an ounce. In terms of gold, that new car would have been worth about 19 ounces of gold in 1917 and that same amount of gold would be required to buy a new car now.
Cars are just one example of how gold has allowed consumers to stay even or beat inflation. Homes, movie ticket prices and many other items cost about the same in terms in gold prices over periods of fifty to a hundred years or even longer. This relationship has held steady for thousands of years. It is very likely that hundreds of years from now investors will look back and realize that gold has been a valuable inflation hedge under the economic conditions to come.
Wage increases have also kept pace with gold. For hundreds of years, the market value of thirty to forty ounces of gold has been equivalent to an average middle class salary. It is also very likely true that in 2100, the price of a new car will be much higher than it is now. That new car will probably be worth about 19 ounces of gold or six months wages in current dollars.
The above commentary is for informational purposes only and is not a solicitation by National Gold Group or Michael Carr. It is the commentator’s opinion only and not intended for investment recommendations, and does not necessarily reflect the views of National Gold Group. Any references to outside sources are believed accurate. Past performance is not a guarantee of future results. All commodities involve risk. Investors should consult their financial advisor before making any investment decisions.