Inflation and the Likelihood Of Seeing $10,000 Gold

…The price of gold continues to increase over time and reflects the deterioration and loss in purchasing power of the U.S. dollar but, in inflation-adjusted terms, the price of gold has never exceeded its 1980 peak…

This version of the original article by Kelsey Williams (kelseywilliamsgold.com) has been edited [ ] and abridged (…) to provide you with a faster and easier read. Also note that this complete paragraph must be included in any re-posting to avoid copyright infringement.

Current Gold Prices (inflation-adjusted) – 100 Year Historical Chart

As the chart above shows:

• In January, 1980, the average closing price for gold was $678 ozt. [troy ounce]. The equivalent price today in inflation-adjusted dollars is $2,505/ozt..
• In August, 2011, the average closing price for gold was $1.825/ozt. and the equivalent price today in inflation-adjusted dollars is $2,315/ozt..
• In August, 2020, the average closing price for gold was $1.970/ozt. and the equivalent price today in inflation-adjusted dollars is $2,179/ozt..

UNDERSTANDING PRICE VS. VALUE

As the dollar continues to lose purchasing power, the prices on the chart continue to change. Below is a table which reflects actual gold prices compared to changing inflation-adjusted prices…[which] clarifies the difference between price and value. At $2,000/ozt., the price of gold is one hundred times higher than it was a century ago at $20/ozt. but a troy ounce of gold at $2,000 today is no more valuable than it was a hundred years ago because gold’s price at $2000/ozt. reflects the accumulated loss in purchasing power of the U.S. dollar…

The price of gold continues to rise but its value is constant and unchanging. This is especially important if we are to understand profit potential in gold – or the lack of it.

THE PROFIT POTENTIAL IN GOLD

Gold’s upside potential at any particular time can be determined by comparing the current price of gold to its previous inflation-adjusted price peak and any combination of lower gold prices and the cumulative ongoing loss in U.S. dollar purchasing power increases the gap. This is what happened between 1980 and 2000. Looking at the chart above, we can see that the gap was widest and the profit potential greatest in 1999-2000; more so than at any other time since 1980.

DOLLAR COLLAPSE AND $10,000 GOLD 

In order for gold to reach $10,000, the U.S. dollar would have to lose 80% of its current purchasing power – before you see the gold price reflect it – and if that were to happen, most goods and services would increase in price five-fold and any profits in gold would be needed to sustain and maintain your current lifestyle.

There is only one reason the price of gold in dollars rises over time. The higher price of gold over time reflects the loss of purchasing power in the U.S. dollar that has already occurred. 

The price of gold will never outrun the cumulative effects of inflation. This means that the higher price for gold is offset by the dollar’s actual loss in purchasing power.

SUMMARY AND CONCLUSION 

Gold is not an investment…Its price is determined exclusively by the fortunes of the U.S. dollar so, rather than looking for profits in gold and subjecting oneself to disappointment, [it would be] better to focus on accumulation of the metal. How much gold you own is more important than its price or any supposed profit potential.