USD Gold Comparison
Ooooh A Slippery Dip!
We are all used to looking at the price of gold in USD. It is interesting to think of how much gold a single $USD will buy you. Even though we no longer use the gold standard there is a reasonable argument that the value of gold is effectively constant and currencies vary relative to it.
The chart below (click on it for a larger version) shows how much gold one $USD buys. The interesting thing to note is that it has been falling like a stone ever since April 2001, which if I recall correctly is before Sept 11 and the current War so we can’t blame that. In fact it lines up with the first NASDAQ bottom of the Tech Wreck.
It seems the US never really recovered from their IT industry crashing. (Probably because they sent all their work to India afterwards – but that is a different story).
In stock market terms this is about as straight a line as you can get by the way. Just remember this is over 8 years of relentless decline.
It reflects a steady and massive erosion in US buying power that has only just leveled out thanks to various games being played with currency in the current crisis. Rumors are that the US does not want their currency to go below a thousandth of an ounce (0.001 on the chart) which is where it has paused. Whether this is simply a dead cat bounce or not only time will tell.
If this makes you feel worried, then remember that your currency is probably only a fraction of the $USD
$USD Buying Power
May 07 2009 05:39 pm | Economics
