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> The price of gold currently implies inflation of ~8% p.a. since 2005 Looking at the chart. have we been experiencing deflation since 2011?
by Redoubts 7y ago
> The price of gold currently implies inflation of ~8% p.a. since 2005
Looking at the chart. have we been experiencing deflation since 2011?
- zaroth 7y agoGold tells you the strength of the dollar, not the rate of inflation. Two separate things.
- roenxi 7y agoNo. And I don't think that inflation ever reached ~30% which is how the gold price performed 2006-2011. It isn't a perfect proxy. I'm happy to say it isn't a proxy at all. But I don't believe the long-term real price of gold is rising and it certainly does not offer a financial yield in real terms. Explaining today's prices vs the ~$500 base after the 1980s bubble is much easier if we assume that inflation is about equal to the amount of money in the system (aka the M2) instead of the CPI. I'd bet (as in, I'm basing my financial planning decisions) that the next time gold spikes up in price it will imply inflation from 2011 has been higher than 2% too. My money is on the price of gold tracking closer to the M2 monetary supply than CPI inflation over the long term.