Putting A Price On Gold Doesn’t Tell Us Anything About Gold – Here’s Why

 

…Gold is original money and is the original measure of value for everything else. It was never a question as to what gold is worth…

By Kelsey Williams

THE PRICE OF GOLD IS IRRELEVANT

• The price of gold is irrelevant as far as gold is concerned. Since gold is real (and original) money, attempts to put a price on it are misguided. The value of gold is in its use as money and putting a price on it does not tell us anything about gold.
• The gold price tells us only what has happened to the medium used to measure the value of gold. In other words, the gold price in U.S. dollars tells us only what has happened, or is happening, to the dollar.
• A higher gold price over time is a reflection of the loss of purchasing power in the U.S. dollar. A higher gold price does not in any way mean that gold is gaining in value.
• The same relationship exists between gold and any other currency or medium used to price gold.  Attempts to price gold in anything other than dollars won’t change anything with respect to the value of gold.
  • If the U.S. dollar were replaced as the world’s reserve currency, all that would matter with respect to the price of gold in dollars is whether the dollar lost additional purchasing power and how much.
  • If gold were to be priced in euros or yen, the only thing a rising gold price will tell us is that the euro or yen has lost additional purchasing power.

STOP ANALYZING GOLD

Attempts to analyze gold are pointless. Gold’s value has already been established. That value – its use as money – is constant and unchanging. Gold in its role as money is a long-term store of value. What I can buy with an ounce of gold today is no more or less than what could be bought ten years , or one hundred years ago. An ounce of gold today is no more valuable than it was in Roman times, either.

…Assuming correlation – or inverse correlation – of anything  other than the purchasing power of the U.S. dollar is misguided. The price of gold is ALL about the U.S. dollar. (see What’s Next For Gold Is Always About The  U.S. Dollar)

NO NEW HIGHS 

Never has more been said about nothing than the latest references to “new highs in gold”. [Read 89 Analysts Now Forecast Gold Going To $3,000 & Beyond!]

When the price of gold peaked in August 2020 at $2,058/ozt. it was indicative of a 99% loss of purchasing power in the U.S. dollar. The $2,058 price was a one-hundred fold increase from its its original fixed price of $20.67 oz. and confirmed the effects of more than a century of inflation. The one-hundred fold increase in gold’s price did not in any way, shape, or form tell us that the value of gold had increased. It was merely a reflection of the loss of purchasing power in the U.S. dollar… When comparing the gold price in today’s dollars to the peak in 1980, gold’s price needs to be $2650 oz. just to match the 1980 peak…

SUMMARY AND CONCLUSION 

• Gold is real money and the original measure of value for everything else. The U.S. dollar and all fiat currencies are substitutes for real money/gold…
• The price of gold in U.S. dollars or anything else tells us nothing about gold. A higher gold price in dollars tells us in hindsight how much purchasing power the dollar has lost – nothing more, nothing else.
• No matter how high the price of gold goes in U.S. dollars, the value of an ounce of gold remains the same. Gold is literally priceless.