Gold Price Graph 100 Years – Spot gold hit $2,067 per troy ounce today, another all-time high. The US dollar has lost 99% of its value against gold since the 1930s.

The world’s reserve currency is said to be better at storing value, but the US dollar has been unable to compete with gold due to the endless money pressure. In 1932 the gold price was $20.67 per troy ounce. Today it crossed $2,067.

Gold Price Graph 100 Years

That is a 99% drop in the value of the dollar against gold. Other reserve currencies, such as the British pound and the Japanese yen, fared even worse. The yen has lost 99.98% of its value against gold in 100 years. Note that the chart below has a window scale.

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Gold doesn’t make a profit if you don’t lend it, but it is the only financial asset in the world that is accepted without counterparty risk. Because of its immutable properties, gold maintained its role as the sun in our monetary cosmos after the gold standard was abolished in 1971. Central banks around the world continued to hold onto their gold despite its price reaching all-time highs, as it is now. This is because of Gresham’s law, which states that ‘bad money drives out the good’. When the gold price rises, central banks are more likely to hoard gold (good money) and spend money that declines in value (bad money).

In the chart below you can see that the purchasing power of gold is very stable. As the price of gold rises over time, it largely offsets the devaluation of fiat currencies against goods and services. In other words, the price of gold increases by the same amount as consumer prices. Gold is even showing an upward trend in purchasing power, which could indicate that government published inflation figures are too low. Another theory is that the purchasing power of healthy money, such as gold, should increase as technological advances make goods cheaper.

You would think that interest-bearing dollars, such as US Treasuries, would have outperformed gold since the gold standard was lifted in 1971. But this is not true. Gold outperformed Treasuries.

In my opinion, the gold price will continue to rise and be included in the new international monetary system. The current record high in dollars or euros is only nominal. Adjusted for inflation, gold is not at an all-time high. More importantly, I expect central banks to lower their currencies further in the coming years, as the world has never been so heavily indebted. Debt around the world is completely unsustainable and can only be reduced through debt relief or inflation. The Federal Reserve and other central banks say they are opting for inflation. A few months ago, the President of the European Central Bank, Lagarde, said: “We should be happier with work than with our savings.” This is a clear admission that (in this case) the euro savings will be destroyed.

Gold Prices And U.s. Dollar Correlation

Debt reduction through inflation is “the most profitable, least understood, and most common form of major debt restructuring.” This has been done many times in history (see table below) and will be done again. Owning physical gold that is kept out of the banking system protects your purchasing power from depreciation of the currency.

After World War II, the US government kept interest rates very low while driving inflation up. The result was a very negative real interest rate (nominal rate minus inflation).

Jan Nieuwenhuij is a financial researcher and gold analyst at Gainesville Coins. Nieuwenhuis mainly writes about gold and covers topics such as the global physical gold market, derivatives markets, central bank gold policy and the international monetary system.

If you have an ad blocker enabled, you may be blocked from continuing. Disable your adblocker and refresh. The FEDERAL RESERVE’s first rate hike in 7 years, which remained at zero last December, has finally put gold out of its misery,

Gold Price History

The price of gold marked a new six-year low, reaching $1,046 an ounce immediately after the Fed rate hike. That extended the metal’s losses to 45% from the record high dollar price in September 2011 ($1,920).

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Gold first failed to regain that spike in 2012, when the Fed expanded its quantitative easing bond-buying program to $85 billion a month. Gold then sank in 2013 (as former chairman Ben Bernanke muttered about tapering), then stabilized in 2014 (even as the tapering became a reality), before falling again in 2015 (as Janet Yellen murmured again and again, that her committee) . , such as really raising interest rates from zero before the end of last year).

The Fed printed its first rate hike in 2015, but just barely! And with this fake war “Will they? When?” finally ended, gold prices have barely looked back and 2016 marked the strongest gain in half a year since the outbreak of the financial crisis in 2007.

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That jump of 27% came when the Fed failed to push through with a second rate hike, let alone the two or three it took in September to maintain the central bank’s own forecast for 2016.

This is now the longest “pause” in any modern interest rate cycle. And even if the Fed does make a rate hike at next week’s meeting, the question is whether it qualifies as a rate hike cycle.

The Fed has never waited as long as it did in 2009-2015. per year before the rate changes were implemented. It has never tumbled and fallen for so long before one rise followed another.

However, the price of gold fell over the summer, losing $50 an ounce from its two-year high of $1,375, which was reached just after the shock of the UK’s Brexit referendum. As always desperate for a “one-plus-one” story, financial news outlets and traders attributed the withdrawal of gold entirely to the Fed’s chatter as some Fed members sooner or later turned to calls for a second one. interest rate increase. concerned about the unintended consequences of the current near-record low ceiling of 0.50%.

Watch What’s Ahead For Gold In 2017?

Judging by the financial news, the consensus is that next week’s Fed rate decision has become D-Day for gold’s strong rally this year.

Since 1986, the price of gold will rise if rates rise, not if they stay the same, and at a greater percentage.

In fact, in the long run, rate hikes have been followed by much stronger gold gains than rate cuts, and more often than not.

What is going on? In both the short and long term, this seems predictable – primarily for the Fed’s own decision, but more deeply for inflation.

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To start with predicting the Fed is the fact that making money from financial trading means moving forward, buying before the asset rises and selling before it falls.

So if gold were to fall when the Fed rates go up – as everyone thinks – because it is not paying income and thus has the opportunity cost of lost interest on cash, then no one should expect it.

The point is that presale will lower the gold price before the Fed announces it (much like buying before a rate cut pushes them up). And, brought forward over time, this self-realization opens a gap between what gold is intuitively told when the Fed raises (or lowers) and what actually happens after the fact.

Historically, the recent drop in gold prices suggests that the market believes the Fed could decide to raise interest rates at its September meeting. But will gold drop into next week if the market’s guesses prove correct?

File:exhibit No. 4.9

Note how in the long run, the one-year monthly average return of gold on either side of an interest rate hike is significantly stronger than the 24-month average around a cut or hold. This threatens the market’s consensus on how gold prices will behave if Fed rates change. Average monthly returns are twice as high when the Fed is walking than when it is cutting.

But of course gold falls when the Fed raises, right? Not according to the data. The simplest explanation is inflation.

Consumer price inflation is half the official mandate of the US Fed (the other is jobs). And like every other central bank today, the Fed has long believed that higher rates would lower the cost of living, while lower rates would raise them.

So if the Fed raises interest rates, all other things being equal, it’s because the central bank is watching inflation. Unsurprisingly, gold also tends to outperform during these periods.

The Essence Of Gold Supply And Demand Dynamics

Here in September 2016, the focus on inflation threatens to distort the trading advice you hope to find in the above data. Because inflation, at least in the official CPI data, is almost non-existent.

Every 5 years in fact – and excluding the “volatile” fundamentals the Fed loves

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