Tell that to the people that bought gold in 1980 🙂
Nice chart. But if you really want to understand the effects of inflation on the dollar and why you never really lose purchasing power when you hold gold, consider the following:
Gold will buy the same amount of goods today that it did in 1975, because the purchasing power of gold rises or falls to reflect the relative strength (or lack thereof) of the dollar.
In 1975, 100 oz of gold would buy a mid-size care for $3500.
In 2003, 100 oz of gold would buy the same mid-size car for $35,000.
Today, 100 oz of gold will buy the mid-size car PLUS a couple of Rolexes. Granted, it is historically unusual for the purchasing power of gold to be so completely disproportionate to that of the dollar, but hey — that’s what happens when your currency is collapsing.
So even though gold has fallen, for the past two (2) decades, from it’s all time high of $800 oz (which was, incidentally, the last time we faced a near-currency collapse), gold has always bought the same amount of goods in those intervening years. Meaning, whether gold was $50/oz or $250/oz, it always bought the SAME mid-size car.
There aren’t many investments that will give you that kind of security. Scratch that, there aren’t ANY other investments that will give you that kind of security.
