Friday, September 25, 2009

Don't Sell!: Inflation-Adjusted Gold Charts (Palladium)

(UPDATE: this was written just September 25. Today is October 8. The gold price today is $1050 per ounce, its highest dollar total ever. A quick read through the following article will show you how that price is no where near its all time high--thanks to inflation.)

I've been watching the price movements of gold and silver and palladium and platinum over the past month and haven't had too much to comment. What I was thinking of doing, actually, is to sell some gold and buy some silver with it, as I think silver is more undervalued that gold. However, that's a differnet discussion for a different day. Let's look at the history of the gold price and a chart that I "borrowed" from Goldprice.org. Look over this chart carefully and then we'll continue:

Gold Price History Chart

Gold Price History Chart


Okay, did you look? Gold is at an all-time high, right? Well, yes, you're right. It's about $1000 now and hit $1020 last week. Well, this has been mentioned before when talking about all metals including silver, platinum, palladium, and rhodium. But think again, the average wages back in 1981, when gold was nearly $900 were less than half of what they are now. So now, gold is worth only $1000? In fact, look back to the year 2000. Look how undervalued it was? Now let's look at a chart with inflation factored in (I grabbed this one from Wikipedia):

Inflation-Adjusted Gold Price History Chart

Inflation Adjusted Gold Price History Chart

Now don't pay attention to all the different lines. It will get confusing. I don't know exactly what they're getting at either, but, this is chart showing the gold worth in 2009 dollars. As you can see, all the lines are the same in 2008 (or 2009, which would be similar although this chart is from last year). But, look back in 1981! Gold is off the charts! So, in 1981, an ounce of gold was worth at least 5x what it's worth today if you measure it by the amount of goods you can buy with it. Today, an ounce of gold would buy you about one good suit. Back then, an ounce of gold would have bought you at least 7 suits. Understand?

I know this post is pretty basic for most of you, but, I just wanted to reiterate that although gold is hovering and reaching highs and everyone is saying, "Gold All Time High," it's really NOT at an all time high. It was much higher in 1981. Now, since this is a palladium site, let's take a look at palladium:

Palladium Price History Chart

Palladium Price History Chart


Do you see how high palladium was due to demand? Factor in inflation it would probably have been 25% higher. It's hovering around the $300 mark now, so, it's still pretty low. Don't sell palladium now either, if you have the money, buy palladium just as you would gold. Buy silver too, don't sell silver, keep it.

That's my take on things. I know most of you know this but some people have made good investments in precious metals and I don't want them to sell before they reach full potential! Good luck to all!

1 comment:

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