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Hold over
Hold over's picture
Joined: 10/10/2011
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got a question

I was talking to my friend today about PM's and I told him that gold and silver retain their value and gold is inflation proof  and its not so much that Pms rise as much as it is that the value of the dollar drops. So I compared a silver dime in 1964 to today , and told him that the silver dime bought a gallon of gas in 64 and can still do so today. 

Later on it got me to thinking,and I applied same formula  to gold.  I took spot price of gold in 1970 which was 38 an oz and compared it to the average cost of a car in 1970.  $3900  

and figured it took 102 oz of gold to buy an average  car in 1970

So I multiplied 102oz of gold by todays spot price of 1700 and got $$173,400

The average home in 1970 was 24,000 divided by  ounces of gold @ $38 which was 631 oz  of gold to buy the average home. 

plugging in the same info from todays spot price and multiplying by 631, I  got 107,2700 for the cost of the average home today. which is obviously not correct so my question is what made gold so much more expensive than silver or cash in percentile?

Why the big difference in gold???

What Im saying is silver has maintained    its ratio to goods since 1970, but gold exceeded its good to ounce ratio by a huge margin . I dont understand .

Edited by admin on 11/08/2014 - 06:30
SilverFocker's picture
Joined: 06/14/2011
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Look at the silver-gold ratio

Look at the silver-gold ratio in the beginning time frame, then chart it until present. You will see the spread get higher from where it should be.

Silver is a small market, much easier to manipulate than gold add the fact that silver is also an industrial metal. ( must keep the I stuff flowing)

One day in the near future the ratio will again converge back to where it should be...with the figures you have done, refigure the silver price at 80 bucks, as this is really where it should be, your results will be dramatically's not that gold has ran away, it's that silver has been held back and has alot of room to run to catch up, which makes it a better buy for long term hold.

survivalwstyle's picture
Joined: 07/19/2011
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right on silver focker

that sums it up. Ag is has and wiLL continue to be my choice as long as the spread stays above 40


enjoy everyday

Silver Rock
Silver Rock's picture
Joined: 03/19/2012
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Liquidity and Fractional Ounce Gold Coins
No one can predict with absolute certainty the future price of gold, however measuring the value of gold in units of the diminishing value of paper dollars strongly suggests that gold will rise in price based on this measurement. Also, given that at most only about 2% of the public owns physical gold bullion a doubling of demand to just 4% of the public would send the price of gold spiraling higher. And if just 10% of the public starts bidding for gold - all bets are off - come up with your own projection.

Point is, don't overlook the value of adding fractional gold bullion coins to your physical gold holdings. Lets say as an example that gold reaches $4000/ounce and all your holdings are in ten ounce gold bars and you want to take $2000 from your gold holdings to buy the latest state of the art wide screen. Do you really want to cash out $40,000 worth of gold just to get $2000 in cash? Wouldn't you like the option of having, lets say, ten half ounce American Gold Eagles as part of your gold holdings? Also, should gold go to $4000/ounce, or higher, the demand for fractional ounce gold bullion will likely be much greater at this price level than at the current price level - driving the premium over spot much higher than it is today.

Anyway - something to think about. Hope this offers some helpful perspective.

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