Comment by jonhohle
17 hours ago
Gold is considered to have relatively consistent value over time.
Median home price in 1940 Boston area was $3,600 or 180oz gold. Today the median home price is 215oz of gold in the same area (or $670,000). In terms of gold, house prices are up 20%. In terms of dollars, 18000%.
A new car still costs around 13oz of gold.
Real inflation of fiat is easy to obscure for political reasons. That’s much harder to do with the market value of gold.
> Gold is considered to have relatively consistent value over time.
Not really. It has fluctuated a lot. You can pick starting and ending points a few years apart and come up with very different results relative to actual inflation.
> A new car still costs around 13oz of gold.
Now take this idea and average it across a large number of different items and you arrive at inflation statistics, which are better than using 1 commodity or 1 purchasable item as a benchmark.
The key word is relatively. Compared to cash or index investing gold has been far more consistent, while cash has devalued loads even after adjusting for the government indexes, and stocks have gone up loads in real terms assuming you did something passive and reinvested dividends.
The reason it's been fairly constant is that over the long term the cost is driven by the cost of mining it and costs of say getting an acre of land, digging up earth and processing it remains somewhat comparable to the cost of getting an acre of land and building a house.
Cash depreciates because voters say we need more wages and it's easier for governments to print money than make everyone richer in real terms. They can try to generate the illusion of richer in real terms by fiddling the inflation stats, say focusing on a basket of vegetables and not medical costs or beachfront property,
Stocks go up because companies make profits and reinvest.
> Now take this idea and average it across a large number of different items and you arrive at inflation statistics
If only it was as simple: you will need to introduce weights between different items, and account to the change of those weights too. Also gold isn't just commodity, it's monetary commodity.
If you use official inflation dollars you get 1$ 1940 ~= 23$ 2025. You can see how magnitude wrong it is for housing or cars in the example above.
Here's food prices from 1940 diner: > A 25-cent platter, 5-cent hotdog, and 10-cent hamburger. Also doesn't really work with official inflation dollars either. And again works much better with gold prices.
Median household income in the 1940’s seems to be something like $2,600. Using your inflation figure that is ~$59800 in today’s dollars.
2024 there seems to be an estimated ~$75,000 median household income.
Housing and cars are also apples and oranges seeing that the average family size and sq footage for even 50’s homes is completely different than today. Today fewer people are living in significantly larger spaces than was normal back then.
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Using core, required assets actually makes more sense considering recurring purchases tend to change over time.
Gold was a standard for a reason
Yeah people like shiny rocks. Luckily we switched to a more stable system after the great depression. Although with this major tarrifs war who knows maybe Trump will decide to really collapse us economy and switch to the gold syatem
>Not really. It has fluctuated a lot. You can pick starting and ending points a few years apart and come up with very different results relative to actual inflation.
I think he's talking about really long periods of time. It's true that gold is an extremely volatile investment, whose price can seemingly quadruple or be cut in four at any time. But if you look over periods where the price of gold increased by more than 20x, this becomes a lot less important when you try to estimate things like the average rate of inflation. If you work with a ten-year moving average of the price of gold the problem is also reduced. Gold is the only metal whose sulfide is unstable under standard conditions (101.3/293.15).
In other fields, this is called a "low-pass filter".
Naw. Just look at the plots over the last hundred years. Lately, it's become just as financialized at bitcoin or any of the other "stores of value".
https://www.5yearcharts.com/historical-gold-price-chart-how-...
> A new car still costs around 13oz of gold.
A car or house built in 2025 is very different object than one built in 1945.
Consistent commodities like coal, rice, or silver make better points of comparison, but each give wildly different values for inflation just as gold does. Inflation doesn’t mean anything specific on very long timescales because the underlying economy fundamentally changes.
There’s really nothing suggesting gold is a more fundamental measure of value than silver which was far more commonly traded. IMO the reason people focus on gold today is its more consistent use in video games as a currency rather than say platinum. There’s just never been enough gold to use as a common medium of exchange between individuals, but in virtual worlds that’s a non issue.
Houses built in 1945 are still on the market for comparable prices to those built in 2025
Nope land is comparable, subtract that out and you’ll see a huge difference as you literally can’t legally build a house that shitty in most areas. These things were typically ~750 SF and had terrible insulation via single pane windows etc.
Survivorship bias means most of the lowest quality housing stock either didn’t survive or was significantly upgraded, but that’s irrelevant when talking about what was being built.
> A new car still costs around 13oz of gold
But a new car today is vastly different from a 1940s car, so different that it's nonsensical to use it to compare purchasing power of gold.
It's all about utility. So it does not really matter how better or worse cars are over time
That is a very interesting utility function
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What is a 'car'? I don't know what a car is. Sorry. Is it a used Ford Bronco for $2000 or a Ferrari Purasongue for $450,000?
They have basically the same utility. What is a car?
Median home prices have risen. Home prices have gotten out of control due to limits on supply that's one of the main factors of inflation. Cars today are very different then cars back then and come with more features. The dollar is what we use for currency and the measurement of inflation is well defined (even if there can be good faith argument of which inflation works better especially when comparing long term) meanwhile gold is just shiny rocks
> Gold is considered to have relatively consistent value over time.
Uh... Gold has doubled in the last two years. Fast forward past the trade war and it'll likely crash again. Gold is far, far more volatile than currencies. More even than securities, and frankly even most commodities are more stable.
> In terms of gold, house prices are up 20%
Except that the gold price fluctuated by 50% within the last 30 years: https://goldprice.org/gold-price-history.html