4 ms·

The minimal wage that is mostly what is paid in WalMart and is about $15,000 a year. Let's put it in historical perspective. In 1969 the minimal wage was $1.60.

The minimal wage that is mostly what is paid in WalMart and is about $15,000 a year. Let's put it in historical perspective. In 1969 the minimal wage was $1.60. And in 1969 the price of ounce of silver was about $1.70. In other words 40 years ago the minimal wage in the USA was about $22 USD using today's silver price as an inflation indicator. Using 2013 data 22.00 USD is on par with average American hourly pay. This what was the minimal wage of 1969 became an average pay in 2013. So if you ever wonder why your grandad working single simple job could support his family with stay at home wife, 3 or 4 kids, have vacation house and literally no debt – that's why. The average pay is 3 times lower today than it was 40 years ago when the real money – gold and silver – are used as an indicator. Of course some will point out to believe that gold and silver prices are in the bubble territory and that's why my numbers don't make any sense. The problem with that reasoning is that gold is not experiencing bubble pricing. How do I know that? Because gold mining cost is at $1,200 with gold price merely covering it at $1,400. Bubbles are experienced in assets that sell by multiples of their real price, not the ones that are sold basically at the production cost. The staggering truth is that the current gold price simply reflects the high cost of living in the US today. The only correct conclusion seems to be that an average American worker is as poor today as minimal wage worker was 40 years ago. No wonder fast-food strikes set for cities nationwide: http://www.seattlepi.com/news/us/article/Fast-food-strikes-set-for-cities-nationwide-4770082.php http://www.seattlepi.com/news/us/article/Fast-food-strikes-s...

maxerickson 13y ago
You are missing the step where mining activity will frantically respond to the commodity price. That is, if gold were trading at $100 an ounce, no one would be working $1200 mines. The consumptive demand for gold could be met for some absurdly long time using the gold sitting in repositories, there is no actual need to produce it, it doesn't particularly have a production cost.
- LekkoscPiwa 13y ago
  That's simple supply and demand. When supply weakens and the demand stays they same, the price goes up. So the price ends up higher because there are less producers but the same amount of people who want to buy gold. This what you describe creates shortages and shortages produce higher prices.
  - maxerickson 13y ago
    There is also at least the possibility of demand weakening. Very weak gold demand would be a catastrophe for gold miners.
    - LekkoscPiwa 13y ago
      Very true. It's all supply & demand. That's how markets correct themselves: when the supply is vast but demand non-existent, the prices fall causing supply side (mines in our case) go bankrupt, have financial difficulties, etc. - forcing them to cut cost and improve, be more efficient. On the other hand in the meantime while the supply side isn't really there, the demand starts occurring again because the product becomes very rare. And then the rarity causes the prices to go up again. That's how it usually works not only in gold mining industry but eveywhere. Let's say iPhone apps. Once they become so plentiful and cheap (free), supply side (developers) start doing other stuff, for example programming web sites, or desktop software. This causes rarity of new iPhone apps, so people start to be willing to pay more for an (let's say) iPhone game because there are less and less game issued every week. The prices going up makes new developers entering the scene, etc. Another point, I'd like to make is that gold mining cost has been just $800 per ounce 2 years back. This just shows you how inflation works. Gold mining is energy intensive and labor intensive. Once labor cost and energy cost are up, gold price is up too. That's why the Government hates it so much because it just simply shows how big the real inflation is while the Government tries to tell us all we have below 1% inflation per annum.
mason240 13y ago
>when the real money – gold and silver – are used as an indicator. The basis of your argument is wrong. An individual commodity like gold can't be used as indicator of economic levels. It is just as affected by supply and demand as any other commodity. This is similar to when people try to compare the price of gas at the pump to the economy as a whole ("back when I was kid, gas was 10 cents a gallon, and now it's $3.50! Why aren't wages 35 times higher!").
- LekkoscPiwa 13y ago
  Gold isn't commodity - why the central banks of the world are storing it? And not oil. And not steel. And not coal? Because gold still functions as _money_ in people's minds. This includes central bankers. And gold historically, for the past 5,000 years, has been used as an indicator of economic levels. One of the good reasons is that you can't have a Government play with it. Did you know that if the same formula for accounting for inflation was used today as was used in Reagan years the US official inflation would be at 10% ? That's right, if we just used the official Government formula of counting inflation from 1980s we are at 10% today. While they try to push this propaganda it is non-existent. I love your quote: "back when I was kid, gas was 10 cents a gallon, and now it's $3.50! Why aren't wages 35 times higher!" I think mine is better: "back when I was kid, gas was 10 silver cents a gallon, and now it's still 10 silver cents! Why wages are 3 times lower in silver terms!" Because if you google it, you'll know that barrel of oil price in real money has been the same for the past 50 years. About 1/15 price of ounce of gold. I.e. 1 ounce of gold buys you 15 barrels of oil. With +/- 5 barrels deviation depending on the market cycle. But the average is 15. Your quote presents exactly why gold is much better indication of inflation than some government burocrats and their ever-changing formulas to please the Government.
tomjen3 13y ago
That is an insane conclusion, since you forgot to take into account that the price of all the things we buy, with a few exceptions, have dropped dramatically. Very few people are interested in the price of silver, we are far more interested in what a steak cost, or a car, how far they go on a gallon, what a gallon costs, that fresh vegetables are available and that we can buy them, etc.
- LekkoscPiwa 13y ago
  O wow! Steak cost down? Tell me where? I'd love to see that steak. Car cost down? BMWs that I'm interested in are 20% up year to year. Turn off CNBC talk and go shopping yourself and show me falling prices. Because there are none. Cost is going up across the board for everything. Can't believe there are still people out there who prefer to listen to Government propaganda of low inflation to opening their own eyes and seeing prices of everything going up. Health insurance, cars, food, even water. While their price in gold terms has been stagnant for the past 50 years. You tell me why.

maxerickson 13y ago

You are missing the step where mining activity will frantically respond to the commodity price. That is, if gold were trading at $100 an ounce, no one would be working $1200 mines. The consumptive demand for gold could be met for some absurdly long time using the gold sitting in repositories, there is no actual need to produce it, it doesn't particularly have a production cost.

LekkoscPiwa 13y ago
That's simple supply and demand. When supply weakens and the demand stays they same, the price goes up. So the price ends up higher because there are less producers but the same amount of people who want to buy gold. This what you describe creates shortages and shortages produce higher prices.
- maxerickson 13y ago
  There is also at least the possibility of demand weakening. Very weak gold demand would be a catastrophe for gold miners.
  - LekkoscPiwa 13y ago
    Very true. It's all supply & demand. That's how markets correct themselves: when the supply is vast but demand non-existent, the prices fall causing supply side (mines in our case) go bankrupt, have financial difficulties, etc. - forcing them to cut cost and improve, be more efficient. On the other hand in the meantime while the supply side isn't really there, the demand starts occurring again because the product becomes very rare. And then the rarity causes the prices to go up again. That's how it usually works not only in gold mining industry but eveywhere. Let's say iPhone apps. Once they become so plentiful and cheap (free), supply side (developers) start doing other stuff, for example programming web sites, or desktop software. This causes rarity of new iPhone apps, so people start to be willing to pay more for an (let's say) iPhone game because there are less and less game issued every week. The prices going up makes new developers entering the scene, etc. Another point, I'd like to make is that gold mining cost has been just $800 per ounce 2 years back. This just shows you how inflation works. Gold mining is energy intensive and labor intensive. Once labor cost and energy cost are up, gold price is up too. That's why the Government hates it so much because it just simply shows how big the real inflation is while the Government tries to tell us all we have below 1% inflation per annum.

mason240 13y ago

>when the real money – gold and silver – are used as an indicator. The basis of your argument is wrong. An individual commodity like gold can't be used as indicator of economic levels. It is just as affected by supply and demand as any other commodity. This is similar to when people try to compare the price of gas at the pump to the economy as a whole ("back when I was kid, gas was 10 cents a gallon, and now it's $3.50! Why aren't wages 35 times higher!").

LekkoscPiwa 13y ago
Gold isn't commodity - why the central banks of the world are storing it? And not oil. And not steel. And not coal? Because gold still functions as _money_ in people's minds. This includes central bankers. And gold historically, for the past 5,000 years, has been used as an indicator of economic levels. One of the good reasons is that you can't have a Government play with it. Did you know that if the same formula for accounting for inflation was used today as was used in Reagan years the US official inflation would be at 10% ? That's right, if we just used the official Government formula of counting inflation from 1980s we are at 10% today. While they try to push this propaganda it is non-existent. I love your quote: "back when I was kid, gas was 10 cents a gallon, and now it's $3.50! Why aren't wages 35 times higher!" I think mine is better: "back when I was kid, gas was 10 silver cents a gallon, and now it's still 10 silver cents! Why wages are 3 times lower in silver terms!" Because if you google it, you'll know that barrel of oil price in real money has been the same for the past 50 years. About 1/15 price of ounce of gold. I.e. 1 ounce of gold buys you 15 barrels of oil. With +/- 5 barrels deviation depending on the market cycle. But the average is 15. Your quote presents exactly why gold is much better indication of inflation than some government burocrats and their ever-changing formulas to please the Government.

tomjen3 13y ago

That is an insane conclusion, since you forgot to take into account that the price of all the things we buy, with a few exceptions, have dropped dramatically. Very few people are interested in the price of silver, we are far more interested in what a steak cost, or a car, how far they go on a gallon, what a gallon costs, that fresh vegetables are available and that we can buy them, etc.

LekkoscPiwa 13y ago
O wow! Steak cost down? Tell me where? I'd love to see that steak. Car cost down? BMWs that I'm interested in are 20% up year to year. Turn off CNBC talk and go shopping yourself and show me falling prices. Because there are none. Cost is going up across the board for everything. Can't believe there are still people out there who prefer to listen to Government propaganda of low inflation to opening their own eyes and seeing prices of everything going up. Health insurance, cars, food, even water. While their price in gold terms has been stagnant for the past 50 years. You tell me why.