Historical gold price chart: how much is gold worth?

There are number of reasons to study historical charts of gold. Firstly because it is said to be investors’ safe haven and secondly because it is said to be protecting from inflation.
Lots of things happened on gold’s market in the past years and one can easily ask if it is really worth as much as it costs?

100 years chart*

Gold price's chart about the past 100 years

(Prices are in US dollars)

To get closer the real value it is more important to compare gold’s price change to the inflation. (More precisely, to the customer price index, CPI.) Chart below shows the relative change of both since 1948.
One awaits that if gold is protecting us from inflation, its price follows CPI. Well, its price hasn’t always followed CPI. From historical point of view, it had serious spikes in 1980 and since the financial crysis broke out in 2008.

Gold price vs. US CPI comparison chart 1948-today

So, how much is gold worth then?

The price is still far above the CPI curve, if we consider chart from 1948. On the other hand, if we compare CPI and gold’s price from 1980, it looks like gold has underperformed CPI (?):

Gold price vs. US CPI comparison chart 1980-today

Using CPI we can make a couple estimations for the “real value” based on a couple years** (eg.: closing price was $909.9 in 1980-01-22, CPI was 77.8 in January, 1980, CPI was 243.8 in March, 2017, so current price according to CPI is $909.9 * 243.8 / 77.8 = $2773.1):

CPI value gold price ($) price today according to current CPI ($)
1913 9.8 20.7 515
1950 23.5 40.5 420
1979 68.3 224.1 800
1980 77.8 909.9 2851

You can say that one can explain any gold price using inflation, if numbers are chosen carefully 🙂

Truth be told, gold’s price in 1980 has been driven by massive speculation. Nobody can take seriously any present value calculation based on that – it is just misleading.

All other calculations tell, that price above $1000 is too much today. But this does not mean that it has to go any higher nor means it that it has to fall.

*Charts created with Chartoasis Sesame

**You can download historical gold data back until 1793 here. You can download US CPI data here.

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