Source: Kitco, Inc.
We’re now a little over $100 below the all-time high price of gold, in real (CPI-adjusted) dollars.
The last time the price of gold was at this level, in real terms, was the end of 1979/start of 1980. Not quite half a century ago. Continue reading Post #2127: Oh, the price of gold … IV
As noted in prior posts, an increase in the price of gold is never a good thing.
By my reckoning, we’re now a couple of hundred dollars off the all-time high, in the real (inflation-adjusted) price of gold, in dollars.
My interpretation is that three months of Trumpism managed to do for Russia what 15 years of agitation by the BRICS countries could not.
By reneging on our international commitments, turning on our former allies, aligning ourselves with Russia, and giving an absolutely ignorant crew of knuckleheads complete control over tariffs …
… I do believe we’ve managed to destroy the dollar’s role as the key international currency AND cripple much of our industrial capacity. In one fell swoop.
Restated, by setting large and rapidly changing tariffs, with no policy goal beyond making The Leader happy, we’ve slit our own throats.
It’s just going to take a few months for that to be completely obvious.
Putin’s ROI is beyond calculation.
As noted in prior posts, an increase in the price of gold is never a good thing.
Looking on the bright side, a good chunk of this last push was merely from dollar going down the toilet.
That should happen because gold is an internationally-traded commodity. It’s a global market. When the value of the dollar falls, the value of gold, expressed in those dollars, rises.
I guess I need to start a countdown or something, as by my calculation, if gold tops $3519 (or so), that will be its all-time high in inflation-adjusted (CPI-adjusted) terms.
So, right now, gold is just (1- $3234 / $3519 =~) 8% below its all time high, in real (inflation-adjusted) terms.
I described the economic conditions under which gold set its previous high, in a recent post on this topic:
Before that, my most recent prior post on this topic was from half a year ago:
Oh the price of gold is rising out of sight
And the dollar is in sorry shape tonight
What the dollar used to get us now won’t buy a head of lettuce
No the economic forecast isn’t right
But amidst the clouds I spot a shining ray
I can even glimpse a new and better way
And I’ve devised a plan of action worked it down to the last fraction
And I’m going into action here today.
From: I’m changing my name to Chrysler, recorded by Arlo Guthrie.
When the stock market is making new highs, everybody steps up to take credit for it.
But gold? Nope. Nobody ever takes credit for a rising price of gold. Given the cheapness and ubiquity of public lies these days, you’d think some prominent braggart would try. But nobody ever tries to own a rise in the price of gold. That’s because a rapidly rising price of gold is never good news. And peaks in the price of gold tend to occur when the 💩 is in the process of hitting the 🚁.
What caught my eye about $3100 is that this has to be getting close to setting a new record for the price of gold in real (inflation-adjusted) terms. (In the modern era, where the dollar price of gold has been allowed to float. Post-1970, say.)
If I take the prior price peaks (red arrows I added to the chart above) and use the BLS inflation calculator to express them in 2025 dollars, I find that we’re now just 14% below the all-time high price of gold in real (inflation-adjusted) terms.
So, when Guthrie sang about the rising price of gold, in the context of the 1979 bail-out of Chrysler, following two Arab oil embargoes, the resulting energy crises, two long, deep U.S. recessions, and the near-destruction of the U.S. auto industry with its lack of energy-efficient cars, in a context of persistent double-digit rates of inflation … the price of gold, in real terms, was somewhat higher than it is today.
I’m trying to take some comfort in that. Either things aren’t as bad now, as they were then. Or they aren’t as bad, yet.
Either way: Eat, drink and be merry.
My most recent prior post on this topic was from half a year ago:
I just want to write this down before I forget it, in case I ever need to know this again.
For a silver bullion item of a given weight and purity (fineness), the following prices should occur, from lowest to highest:
Lowest: Scrap value is what a refiner will actually pay you, to take your silver for re-melting. It’s what you can sell silver for, if all you can sell it for is scrap.
Generic bar sell-to price is what a bullion dealer will pay for “any bar, any condition”. If it’s a bar, of the stated weight and purity, they’ll pay that for it.
Coin and good delivery list bar sell-to price. This is what a dealer will pay for name-brand or mint-issued coins and bars.
Spot: The price you see quoted on the business news. This is the price for current delivery of bulk metal of a known fineness, per troy ounce of pure silver content. This is flanked by or maybe is one of the bid and asked price. Doesn’t much matter as bid and asked are rarely far apart in an orderly market.
Generic bar buy-from or list price. This is what a dealer will sell you a generic, any-issuer any-reasonable-condition bar for.
Coin and good delivery list bar buy-from price. This is what a dealer will sell you these items for.
Note that I don’t list “melt value”. That phrase gets tossed around a lot, and a whole lot of people will show you the “melt value” of your purchase as spot price (maybe even spot asking price) times your weight of pure silver. I don’t think that’s how it works, for selling silver as scrap (to be re-melted). Near as I could tell, the price I’d get is the scrap price. If all I could do is have the silver melted down. But this fictitious “melt value” shows up often enough to be worth calling out.
As Gresham’s Law would suggest, for silver bars, dealers seemed to be one or the other, with regard to “good” bars or any bars. Kitco (top-drawer) seemingly only deals in name-brand like-new-quality merchandise. Buy or sell. By contrast, those who bought generic bars sold both generic and name brand bars, at different prices. I think that all makes sense. Maybe.
The only practical upshot is that if a bar can be sold as a name-brand good-quality bar, it should be. It’s worth several percent of the value of the bar. Barring that, if it can be sold as “a bar”, instead of scrap silver, it should be. Likewise. And only as a last resort would you send a bar of any sort, in good condition, off to be remelted, and only receive scrap value for its weight in silver.
God willing, I will never need to know this again.
The graph above contains all the factual content of this post. The price of gold is up quite a bit of late, but the dollar price is nowhere near its all-time high in real (inflation-adjusted) terms. Continue reading Post #2017: The price of gold is up. That’s never good.
