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You know, we all have inflation. You can buy less on your USD, Euros and RUBs today than year before. I was advised to buy gold if I do not want my money be eaten by inflation. Gold is advised for long-term savings. However, I look at the goldprice.org

gold price over 30 years in USD

The price of gold is roughly constant. I ignore the 2008 spike. The constant means that you can buy as much gold per your dollar as you could a year ago. Yet, the dollar is cheaper today, so, the gram of gold must also be cheaper. The plot shows me that gold loses its value as much as the dollar and other printed currencies, it is subject to inflation. It shows that the gold value is eaten at the printed money inflation rate or gold is mined exponentially with time at money doubling rate. Is my observation right?

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  • @DStanley, Where do you read about the higher rate? In the post and in the edit I speak about same rate not higher rate. We have the same mining/printing rate and, thus, gold has the constant price with falling money. That is the point that I have spotted and ask to confirm or explain in other way.
    – Valentina Tihhomirova
    Commented Aug 30, 2017 at 13:58
  • @DStanley Probably my bad English but there is money doubling rate and it is exponential growth over time. I find that gold should have the same doubling rate -- the amount of gold mined doubles every X years. The mass of money doubles every Y years. If gold price is constant, it should be that X is equal to Y.
    – Valentina Tihhomirova
    Commented Aug 30, 2017 at 14:03
  • OK I see what you're saying - I though you were saying the price of gold rises with inflation because more is mined. I take back my comments.
    – D Stanley
    Commented Aug 30, 2017 at 14:08

4 Answers 4

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The general argument put forward by gold lovers isn't that you get the same gold per dollar (or dollars per ounce of gold), but that you get the same consumable product per ounce of gold.

In other words the claim is that the inflation-adjusted price of gold is more-or-less constant.

  • See zerohedge.com link for a chart of gold in 2010 GBP all the way from 1265. ("In 2010 GBP" means its an inflation adjusted chart.) As you can see there is plenty of fluctuation in there, but it just so happens that gold is worth about the same now as it was in 1265.

  • See caseyresearch.com link for a series of anecdotes of the buying power of gold and silver going back some 3000 years.

What this means to you:

  • If you think the stock market is volatile and want to de-risk your holdings for the next 2 years, gold is just as risky

  • If you want to invest some wealth such that it will be worth more (in real terms) when you take it out in 40 years time than today, the stock market has historically given better returns than gold

  • If you want to put money aside, and it to not lose value, for a few hundred years, then gold might be a sensible place to store your wealth

  • (as per comment from @Michael Kjörling) It might be possible to use gold as a partial hedge against the stock market, as the two supposedly have very low correlation

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    However, it might be possible to use gold as a partial hedge against the stock market, as the two supposedly have very low correlation.
    – user
    Commented Aug 31, 2017 at 7:53
  • @MichaelKjörling - Good point, now incorporated in answer. Many thanks.
    – AndyT
    Commented Aug 31, 2017 at 8:44
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    I took the liberty to incorporate the formatting from the comment.
    – user
    Commented Aug 31, 2017 at 8:46
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Gold isn't constant in value. If you look at the high price of $800 in January of 1980 and the low of $291 in 2001, you lost a lot of purchasing power, especially since money in 2001 was worth less than in 1980. People claim gold is a stable store of value but it isn't.

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Gold is a risky and volatile investment. If you want an investment that's inflation-proof, you should buy index-linked government bonds in the currency that you plan to be spending the money in, assuming that government controls its own currency and has a good credit rating.

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No. If you have to ignore a price spike, obviously its value is not constant. Gold is a commodity, just like every other commodity.

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