What if Gold were to catch up to Inflation.
I chose the following figures purely at random.
GOLD PRICE
Jan. 3 1983 $481.29 (1983 avg. price $424.35)
Mar.12 1988 $441.80
Present $294.90
DOW JONES
Jan. 3 1983 1027
Mar.12 1988 2050
Present 8602
From the above figures, Dow/Gold ratio - 1983= 2.133
Mar. 12 1988= 4.64
Present =29.17
If the same ratios were applied as existed in 1983 to today, Gold price would be at $4,032.81
March 1988 (Ten years ago), using its ratio then, Gold would be priced today at $1,853.87
It would be interesting to compare gold with the increase in total money supply. I am sure that similar kinds of figures would result, which reflects what has been happening in terms of inflation over this period. Can gold regain its traditional monetary importance and value?
Last week Another made some astounding comments regarding the POG. He used figures such as $10,000 and even $30,000/oz. Imagine what would occur to the mining industry, stocks, etc. if the POG would go to even say $500/oz, never mind thousands of dollars. All hell would break loose. Another recognized this as he envisioned producers being required to sell directly to the treasury, and their prices controlled at some reasonable figure. I know that most of you regard Another with healthy skepticism, but his theories are at least interesting.
But wouldn't it be nice if the POG were to again approach its traditional relative value? But gold isn't the only commodity in the dumps at this time; oil too is suffering, and at the moment, it is hard to see much improvement in either in the near future.
Phil
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