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The Real Price Of Gold

April 6, 2023

REAL PRICE OF GOLD

Gold has again broken through $2000 oz. and closed above that price. Certainly that is significant. We know that the current price of gold is near its all-time high and has flirted with that same point on several occasions in the past three years.

However, with a focus on the U.S. dollar and the effects of inflation, perhaps we can provide some additional perspective by looking at some simple historical charts.

Below is our first chart (source). It shows a recent three-year history of the physical gold price using monthly average closing prices...

CHART NO. 1

Gold Prices - 3-year Historical Chart

The chart above (Chart No. 1) indicates that the gold price has now broken above all previous peaks dating back to and including the peak in July/August 2020.

Below is our second chart. It has the same gold price history except that the prices have been adjusted for inflation...

CHART NO. 2.

Gold Prices (inflation-adjusted) 3-year Historical Chart

What Chart No. 2 shows us is that when measuring for the actual loss of purchasing power in the U.S. dollar since its peak in 2020, the gold price has actually been in a well-defined downtrend and has not as yet exceeded any of the previous price peaks.

Here is Chart No. 3 which dates back to the gold price peak in August 2011...

CHART NO. 3

Gold Prices (inflation-adjusted) 12-year Historical Chart

In Chart No. 3 we see that gold is well below its price peak from twelve years ago. The intra-day price peak for gold in 2011 was $1896 oz. Now, with the effects of inflation since then, the gold price needs to exceed $2400 oz. just to match that price in today's cheaper dollars.

Our fourth and final chart shows a gold price history dating back to January 1980 when the gold price peaked on an intraday basis at $843 oz. The January 1980 average closing price for gold was $677 oz...

CHART NO. 4

Gold Prices (inflation-adjusted) 43-year Historical Chart

In Chart No. 4, we see that the effects of inflation have a dramatic impact on the gold price over the long term. In today's cheaper dollars, the gold price needs to exceed $2600 oz. just to match the 1980 price of $677 oz.

SUMMARY

When you hear others talking about the gold price breaking above all-time highs, here are some facts to remember...

The real price of gold is ever changing with the effects of inflation.
The gold price reflects the effects of past inflation.
At $2000 oz. today, gold is still much cheaper than its price peaks in 2020, 2011, 1980.

Also see: Gold’s Value…it’s important to understand

By Kelsey Williams, Neptune Global

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Neptune Global is a full service precious metals dealer serving individual investors, the wealth management industry, broker dealers and institutional investors. The firm’s platform of investment bullion includes all forms of traditional physical precious metals in conjunction with innovative physical precious metal investment assets which provide unparalleled diversification, transparency and liquidity. Their leadership in the market is documented with such official designations as being the recipient of a US Patent for the PMC Ounce (Precious Metals Composite). While dynamic offerings such as the PMC Ounce provide investors with many of the conveniences and benefits generally associated with mutual funds and ETFs, all of Neptune Global’s product offerings remain true to the firm’s core convictions related to the time tested value ascribed to physical precious metals ownership.