Chyden Finance: profit from hypocrisy

A decade ago, one troy ounce of gold cost about USD 250. Today, a troy once of gold is going for about USD 1,000.

r = (FV/PV)^t, where:

And the calculator says…

r=14.87% per year, on average. Over the past decade, gold has returned approximately 15% per year, in USD terms.

That is as good an estimate of the real USD inflation rate as one will find.

Using the change in the price of gold as one’s measure of inflation, one could conclude that one is falling behind, if one’s income is not increasing by at least around 15% per year… pretty much every year.

Why gold, aside from all that chatter about 6,000 years of monetary history, the consistent failure of fiat currencies throughout history, and the like? Mainly, because gold serves virtually no purpose other than as a long-term store of value. Granted, individuals like it for jewelry, but the amount of gold jewelry in the world pales when compared with the amount that is cast into bars and stored in vaults.

Silver, platinum, and palladium are considered to be monetary metals, as well, but they are also industrial metals. Gold is not. The prices of the white monetary metals fluctuate not only in response to inflation, but in response to changes in industrial demand, as well.

Keep watching those graphs on the right and invest accordingly*.

CWE

* This is not to say that one should invest in gold, or any other specific commodity, per se. It is to say that one should have inflation front-&-center in one’s mind, when making investment decisions. Consult with a licensed financial adviser, before making any investment decisions.