Lets pick the car I bought in 1969 a brand new Pontiac convertible for $3,000 (I’ve still got it–much to my wife’s dissapointment) That would convert to 8 1/2 ounces of gold at $350 oz back then.
Now if you pick a car at todays prices, say $25,000 and divide it by 8.5 gold should have a value close to $3,000.
Now I’m not a gold bug, but in that same span of time from 1969 to now, the M3 money supply has increased by more than a factor of 10.
Inflation has to be perceived by the masses or it doesn’t exist. It is a tax on people who save for their retirement. The borrower loves this arrangement, borrow expensive dollars today and pay them back with inflated ones later.
My suggestion was to protect your back side with a 10% investment in gold and silver. The decimal point on gold and silver has to move one digit to the right just to keep up with the volume of paper printed. Oil just did it and nobody blinked an eye.
Probably 95% of the worlds gold is in a bank vault. From that perspective, its hard to compare it to the jewelry consumption of current gold production.
I agree that in todays world, our perception of gold is, as a commodity. That view is just not supported by the last 10,000 years of history.
Now lets take the rule of 72. Take the interest rate and divide it into 72. You get 3% in the bank so its going to take 24 years to double your money. Of course the government is going to stop printing money and the Tooth Fairy will be found alive living in downtown Chicago.
Here is an interesting link on M3 (the figure that the government has stopped releasing)
