Skip to comments.What Is Gold Really Worth?
Posted on 05/12/2011 7:09:24 AM PDT by SeekAndFind
What is gold really worth? In one sense, the answer is obvious. Gold is worth $1,515.10/oz, because that is what it is trading for in the market as of this writing. However, all this number means is that an ounce of gold has 1,515.1 times the market value of our current, undefined, fiat dollar.
A deeper and more interesting question is, What should gold be worth? In other words, in terms of what quantity of gold would we define the dollar if we wanted to have a stable currency, a stable economy, and stable financial markets?
This is not just an academic question. The dollar is experiencing a crisis of confidence. Our undefined, unstable dollar caused the crash of late 2008, and it is the principal problem behind what is unfolding as the slowest economic recovery on record.
Right now, the dollar problem is chronic and debilitating, but it could become acute and economically life threatening at any moment. In an acute dollar crisis, Congress would be forced to act, and the action that would best address the problem would be to define the dollar in terms of gold.
The idea of defining the value of the dollar in terms of the value of a fixed weight of gold is not a radical notion. The radicaland ultimately unworkablenotion is for the dollar, which is our basic unit of market value, to have no legal definition. Our undefined, floating dollar is producing the same kind of economic chaos that we would expect if we had a floating second, pound (mass), or foot.
The cost of coping with this economic chaos is enormous and growing. It shows up in many different ways, including anemic real GDP growth, wild swings in gasoline prices, 9.0% unemployment, stagnating real median incomes, and rising inequality.
(Excerpt) Read more at blogs.forbes.com ...
Gold is worth the same as it’s always been. A high quality custom tailored men’s suit.
If I had gold, I would take what I can get now and run. It’s going to drop like a rock this summer.
Gold won’t be worth more than copper when my team completes it’s atomic compositor and generates pure gold from simple raw materials. You have been warned.
give me a pound of gold and I will give you a pound of suits.
At this moment, about $1490.00.
Bernanke(BurnYankee) can do on a scale what no alchemist dared dreamed.
That's a ridiculous myth pushed by gold salesmen.
The price of men's suits have not gone up 620% in the past 10 years. And in the 1980's the price of men's suits didn't suddenly jump to $860 only to fall back to half of that 3 months later.
Good quality men’s suit $1460.00
Whatever one can get for it.
We are not talking about a J C Penny suit.
We are not talking about any man's suit ever made.
The only suit that the price of gold actually tracks would be a man's suit made out of gold itself.
See Post 10
Rather than a man’s suit, I would use a loaf of bread.
With bread you could go back a 1000 years if you wanted.
What was the cost of a loaf of bread when we were on the gold standard and you could pay for it with gold?
What is the cost of a loaf of bread today?
This would be the same amount gold as above.
Cost of Bread / Amount of Gold.
I may do this today if I have a chance.
Everything is on the internet.
In the late 50’s you could buy a gallon of gas for a couple of silver dimes. Today you can buy a gallon of gas for a couple of silver dimes and get change. Yes, I know you would have to stop at a coin store on the way to convert it. I have no interst in selling gold or silver, but denial is not good for your pocket book. I don’t understand the emotional reaction some have to the mention of gold or silver.
Your comment will go down in history as THE textbook example of a MISSED POINT!
Here’s another that I’m certain will totally elude you: With the “dollar” (actually a Rederal Reserve Accounting Unit Denominator or F.R.A.U.D.) currently at 1/33rd of an oz. of SILVER, gas is now selling for around $.20 a gallon — IN PRE ‘65 90% SILVER DIMES!
Contrary to popular belief, gold has very little intrinsic value.
no just making a joke. I look for pre-65 quarters and dimes in my change. any pre-83 penny is worth 3 cents and any nickel 1945-2011 is worth 7 cents. save those pennies and nickels.
“Contrary to popular belief, gold has very little intrinsic value.”
Yea, about the same intrinsic value as a well made custom men’s suit.
The Roman Republic/Empire survived on the Gold std for almost 800 years.
A LOT more than the dollar!
Looks like another George Soros hit piece on Gold. Because the price of Gold has rocketed up over the last 10 years. Soros is trying to get people that are hold gold to sell. LOL!
When I read a headline like this... That means buy more gold.
if they had ransacked cities and took the seashells and left the gold, I don’t think it would have worked.
Talk to me when you are wiping your arse with $100 bills. This is very likely when we lose control of our fiat money. It is mazing the defendwers of paper money. In history EVERY currency has devalued to nothingness. This time it is different, right? LOL.
I'm sure you can find points in history where two different commodities occasionally trade in the same ratio. But that doesn't mean that they always trade that way. Silver doesn't track gasoline, as you can see from the above examples.
Just to clarify:
2001 gasoline cost 0.4 oz of silver
Apr 28, 2011 gas costs 0.078 oz of silver
May 2, 2011 gas costs 0.115 oz of silver.
That change of 0.067 oz between Apr 28 and May 2 is an 80% increase in the price of gasoline when paid in silver. Yet gas only increased 2.3% when priced in dollars.
I guess it was I who missed the point! Sorry.
Contrary to popular belief, there is no such thing as “intrinsic value.”
Gold is worth exactly what it’s always been worth. The value of gold has not changed it’s the value of the dollar that has changed. The dollar is now worth approximately 1/1500th of an ounce of gold. A speck.
A decent suit along with a shirt tie and belt will run you about $1500.00 at a quality men’s fashion store.
I look pretty darn good in a $300 suit.
How long does it take to find a ounce of gold compared to a ounce of BS.
Or togas. Funny how that’s been true forever.
I would be interested in hearing the factors you considered to come to this conclusion.....not to argue about it, but always interested in other's thoughts on the subject.
Good post Phlyer.
That would be true for a speculator. Gold and silver will recover after any summer drop for a simple reason: the Feds and the Fed have no other way to get out of this mess. If they let deflation kick in then the "recovery" will be over. OTOH, they can tank the dollar with little political or economic cost other than screwing dollar-based savers and the Chinese. They will choose to tank the dollar although it will always fluctuate and they will pretend otherwise.
An appropriate place for the reminder that gold and silver coin are the only lawful money (that is, money citizens can be forced to accept by government) under the Constitution, and all of our economic problems (like so many others) would have been avoided by fealty to the Constitution.
I think gold is over-valued right now.
In 1968 I took my first job out of college at an in-house retail ad agency at the entry-level wage of $105/week. That was equal to three ounces of gold per week at the prevailing rate back then ($35/oz).
Today, three ounces of gold a week would be $4,500/week, or $234,000 a year. Hardly an entry-level wage.
How I know this “buy gold” scheme is a scam is:
1. If you had gold, and it was so great, you would not sell it.
2. If gold is great because money is not, how can you buy gold with money?
3. In the commercials to buy gold: Money is worthless! Buy gold! (unsaid is you can buy gold with money)
Yes, you can still buy gold with fiat currency. The problem for the buyer is that while $20.67 used to buy an ounce of gold, it now takes over 70 times that to do so. Now, just which is the truer store of value?
I think you’re missing the point. Of course the price of gold doesn’t perfectly track any other item day to day (like a men’s suit) but over the long term, the value does.
In 1850 you could buy a fine tailored men’s suit for about one ounce of gold. In 1900, that ounce still bought a similar suit. Same in 1950, 1980, and 2011.
The value of gold, like any commodity, does not change over time. It is not an investment. It is a store of value.
Compare that to taking that same ounce of gold in 1900 and using it to buy stock in IBM.
The price to which you refer lasted but a few days and was an outlier that is not a valid consideration
-——What was the cost of a loaf of bread———
Bread is sold by weight and is an American scandal. The moisture content has been pushed upward until the current product is dough. The price has been maintained by increasing the water content