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.
Gold blew through $3100 an ounce this morning.
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:
