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Gold/Mining/Energy : Gold Price Monitor
GDXJ 114.87+3.6%Dec 11 4:00 PM EST
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To: Enigma who wrote (22281)10/26/1998 5:07:00 PM
From: E. Charters  Read Replies (1) of 116813
 
The way to do it is to use the inflation rate and not the interest rate. The interest rate theoretically measures the increase in real wealth over time. It is always about 3% on the average. The bank rate is a combination of the interest rate multiplied by the inflation rate. So on a bank rate of 9% and a real interest rate of 3% the inflation rate is 5.8%. 1.03 X 1.058 = 1.09. The interest rate average for 71 years is supposed to be about 1.09 or 9%. I don't know if that is true. For many years it never went over 3%.(there was still serious hidden inflation in those times) In the 80's it hit double digits for many years and that is where most of the inflation came from. If we take 5.8% for 70 years we get a factor of about 55 times on the inflation index.

Gold then should be worth between 1200 and 1925 dollars per ounce depending on where you start 1929 or 1934.

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