While everyone seems to be all abuzz over Gold’s new highs, you should be aware that these are nominal, not real highs.

Adjusted for Inflation, Gold is nowhere near its all time peak — in real terms, its only about half its prior highs:

>

gold REAL dollars
courtesy of Bianco Research

Category: Commodities, Inflation, Technical Analysis

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

53 Responses to “Gold (Inflation Adjusted)”

  1. franklin411 says:

    The goldbug case has always struck me as slightly stoopid. If an economic calamity leading to the breakdown of civil society is coming, then what good is a yellow metal going to do me? The only metal I’d be interested in stockpiling in that event would be lead.

  2. Bruce in Tn says:

    Well, Franklin, I am not a gold bug here either, but certainly was in the Arthur Burns era. At that time my wife and I had not a lot, but we did own silver bars and Kruggerands, and were happy to do so.

    Mish talks about currency dislocations or disruptions as giving more value to gold, even with his deflationary thesis. Maybe.

    But Franklin, if you’d been in Germany with the killing hyperinflation after WWI and owned gold instead of local currency, you’d have been ok. The people here who are buying gold because they think QE worldwide will bring on global inflation, at least I understand their reasoning, and can respect their gold investment. But with the currency manipulations around the world, I would not call these folks stupid…anxious maybe, but not stupid. I am not buying gold, I reserve that for when inflation becomes established. But that is just me.

  3. Sisyphus says:

    I am tired looking at charts like this or hearing this point ad nauseum during gold’s run over the past few years. As I look at it, the 1980 peak was as absurd as Nasdaq’s peak (which doesn’t get trotted out every time we have a Nasdaq rally) and the result of similar madness of crowds. (I was living in Toronto at the time and remember the people lined up along King St outside The Bank of Nova Scotia to buy gold. Sometimes they do ring a bell at the top). As such the 1980 peak is irrelevant. What was also frustrating was Bloomberg radio this morning trying to explain how gold was rising on inflation fears while the bond market was showing no such fears.
    As I see it it is much simpler. The supply of dollars (QE) is exceeding the supply of gold so the price of gold goes up. So buy your gold and keep an eye on King St.

  4. TraderMark says:

    Obama’s Secret Job Plan by Simon Johnson

    Interesting read – basically let the dollar crumble so 2010 elections can be won in midwest industrial states happy to see their exports become more cost competitive.

    Wow, its just as easy as that ;)

    http://www.thedailybeast.com/blogs-and-stories/2009-10-06/obamas-secret-jobs-plan/

    ~~~

    BR: One does not get the sense his team plans that far ahead . . .

  5. DL says:

    Plenty of room for more bullish fervor.

  6. insaneclownposse says:

    franklin – I knew there was a reason I never read any of your comments. Excellent reasoning my friend – if you don’t understand something, call it dumb.

  7. Bruce in Tn says:

    http://www.cnbc.com/id/33206698#

    Geithner Says Americans Will Have to Save More

    “Everyone is going to have to come to terms with the fact that we are going to save more in the United States,” Geithner said in an interview with German weekly Die Zeit, conducted on Sunday in Istanbul, and due to appear on Oct. 8.

    “If the U.S. starts saving more, that changes the whole world’s economic reality,” he said, according to the German text of the interview. ”

    …I have a couple of things to say about that. Tell that A**hole Bernanke to let rates find their own level, and quit impoverishing the elderly who should not be back in the stock market and are living on very little return from CD’s and treasuries.

    …Second, if you want savings, then quit taxing interest as ordinary income. You’d see less speculation in gold…and it would put the country on a much sounder footing.

    Timmaaayyyyy….your policies are diametrically opposed to saving the way they are currently formulated. Shut up and make some changes. If you want speculation..ok. If you want saving…ok. But don’t set the game up for speculation and then cry about saving…moron.

  8. ItalicBold says:

    I think people over-assume the extent to which things will break down. Gold was a perfectly good investment in Zim as well. Even if the US goes to hell in a hand basket it doesn’t mean gold wont be a good investment in other countries.

    Re the upside, I think the gold bubble that results will be a much more global phenomena this time. The average person around the world will end up piling into this one.

  9. jr says:

    James Grant:

    “The truth about the long term, then, is that it consists of a sequence of short terms and these short terms are full of episodes we call history: war, peace, pestilence, progress, revolution, invention, discovery, depression, enterprise, bankruptcy, birth, death, taxes and such. Kingdoms rise and fall, debts are incurred and repaid, or – as often as not – not repaid, or repaid in money unrecognizable to the poor creditor. Interest runs for years at a time, but rarely even for decades, politics or central banks intervening to disrupt the piling up of what would otherwise be wealth too vast to be stored on the planet Earth. Through it all, just as Hall and Jastram have separately noted, gold endures, holding its value but returning no income. Well, you can’t have everything.”

    http://www.zerohedge.com/article/parable-gold-jim-grant

  10. HCF says:

    @franklin411:
    > If an economic calamity leading to the breakdown of civil society is coming, then what good is a yellow metal going to do me?

    It’s the one universal medium of exchange throughout the ages… You can buy a lot of barrels of oil, bushels of wheat, or pork bellies for a few oz. of gold. If the breakdown of fiat currency is to occur, good luck getting someone to give you any of those goods with paper money. I’m not saying that that is the most likely scenario, but it’s certainly a rational hedge.

    HCF

  11. HCF says:

    …Not to mention that it’s easier to carry a few oz. of gold or silver than a few barrels of oil, bushels of wheat, a few pork bellies, or a ton of lead.

    HCF

  12. ellidc says:

    Think of it as a real asset with no counter party risk, can store high value in small volumes, is fairly liquid, and has been itself accepted as a medium of exchange across cultures and time.

    So it doesn’t really take a prospect of a breakdown of a civil society or a belief that only gold will serve as money to make gold an attractive vehicle to preserve wealth during a time of currency dislocation.

    However, for a interesting tour of how wealth historically has been preserved through breakdowns in civil societies, you could read Barton Biggs, War Wealth and Wisdom. In short, what has worked has been high value portables and out of the way farm land.

    Also, given the saavy of the blog, I would have expected a disclaimer about CPI or whatever measure for inflation Biano used. Under some measures, gold probably looks even farther off its adjusted peak. Looking at Gold/Silver or Gold/Oil ratios gives a different picture too.

  13. SINGER says:

    Good news! the guy bagging my groceries just told me that GOLD has broken out to new highs and that the US dollar is finished as the world’s reserve currency. He heard it on CNN.

  14. call me ahab says:

    tradermark-

    thanks for the link- good stuff-

    pretty much in line with what i was thinking the USG was hoping for- saying you want a strong $ and doing those things that support a strong $ are two different things- and doing the first without doing the 2nd really means that a weaker $ is what is wanted

  15. ellidc says:

    That’s weird SINGER, I heard the same thing from John Paulson. I wonder if he goes to the same grocery?

  16. rootless_cosmopolitan says:

    Today’s headline in the online edition of the German newspaper Die Welt:

    http://www.welt.de/finanzen/article4765446/Deutsche-geraten-in-einen-Goldrausch.html

    Translation: Germans are stricken with gold fever

    The talk is about increasing buying frenzy of gold among Germans out of inflation fears, recently. A fund manager is quoted how the demand for gold almost doubled over two days, how the increasing gold price draws in more and more demand, like a positive reinforcement etc.

    Such a hype is typical for speculative bubbles. My guess is it’s not different with gold this time, like it was with oil last year. That is, many will get burned who jump on this, and the more the later they do.

    rc

  17. HarryWanger says:

    Ok chartists. Here’s my question of the day: Why is it when comparing this recession/recovery with the past we don’t get the “adjusted for inflation” charts like this gold one? It obviously would make a great deal of difference. So for chartists to refer back a year or two or several to a “support level at xxxxx on the DJIA” in reality that level doesn’t exist when adjusted for inflation, right?

  18. GetALife says:

    well, many folks said oil was overpriced on the way up when it hit $60/bl.
    gold may have plenty of upside left.
    downside protection is afforded by cost of production, surely the gold bugs here (should) know what that number is.

  19. Bruce in Tn says:

    I agree, rc, with your thoughts. We are all market timers now. And assume for a second that that is hyperbole, tell me where the value is within comfortable confidence limits….?

    Oil…
    Investment bank equities..
    Real estate….
    Consumer non-discretionary…
    China/India/Brazil/Russia equities…
    Gold…
    Treasuries..
    TIPS…

    Where is the Ma Bell value investment of days gone by?

  20. HCF says:

    @HarryWanger:
    > So for chartists to refer back a year or two or several to a “support level at xxxxx on the DJIA” in reality that level doesn’t exist when adjusted for inflation, right?

    Simple explanation: technical analysis is based on investor psychology and sentiment. Most people think in nominal terms, not real, inflation adjusted terms. Therefore, while 10,00o (or any arbitrary level) on the Dow today is very different than 10 years ago, it is valid analytically as a support or resistance since the masses think in nominal terms.

    HCF

  21. HarryWanger says:

    HCF: I agree with the psychological aspect. Good answer.

  22. tawm says:

    Bruce In TN asks:
    >Where is the Ma Bell value investment of days gone by?

    1) Your local politicians — as government will probably be the only institution left standing
    2) Applied lead (per Franklin411) to protect yourself when #1 turns on you.

  23. Andy T says:

    Oh Barry, not you too!

    “Inflation adjusted gold?”

    There is no such thing. Gold, on its own, is a barometer of inflation, so you cannot have an inflation adjusted inflation barometer. A basket of commodities is yet another inflation measure….so there’s no such thing as “inflation adjusted” oil either.

    ~~~

    BR: Nonsense.

    Gold is a commodity, and like every other commodity, it is subject to the pernicious effects of inflation.

    I know you hate fiat currencies, but wishing them away won’t make it so.

  24. skysurfer says:

    @Singer:

    Now all we need is The USA Today, Time, or Newsweek to put that on their cover, and we will have the all clear to short it. Personally, I am building a position in ZSL (ultra short silver) to play a fall in precious metals.

  25. Andy T says:

    @Singer…

    “Good news! the guy bagging my groceries just told me that GOLD has broken out to new highs and that the US dollar is finished as the world’s reserve currency. He heard it on CNN.”

    Yeah…it must be true then….good one!

  26. HCF says:

    @Andy T:

    I always wish they were more specific on the “inflation adjusted” thing. It’d be interesting to see charts like DJIA in ounces of old, or average home price in ounces of gold. We’d all gain a whole new perspective on things.

    HCF

  27. dss says:

    The last time I checked, my local grocery store does not take gold coins or bars.

    There isn’t enough gold in the world to go around to make it a viable “store of value”.

    If things get so bad that gold indeed is the only medium of exchange accepted, the government would have confiscated it or made it illegal, and if the economy and governments collapse to the extent where gold takes the place of money, I am not sure that I could defend my hoard of gold because I don’t know how to shoot the guns that I surely must have just purchased. It would be “Mad Max” time, which is truly ridiculous.

    I think what is missing in this discussion is that where we are headed is to a lower standard of living, not a new gold standard. Using gold as money is about as rational in these complex financial and economic times as using the telegraph or the pony express to communicate. We will be using currency, but the question is: what does a dollar buy?

    Sure, some lucky people can try to hedge their assets with gold but few will be able to do so. For the most part people will be seeing a gradually lower standard of living until our economy can truly recover, which could take decades, not months. Think Japan, not post-WWII recessions.

  28. SINGER says:

    @ellidc

    That’s right! Paulson’s 13F told everyone that 6 months ago. It’s also not a secret that GOLD has gone from 250 to 1050. My sarcasm is directed at the fact that now we have the buy GOLD, sell DOLLAR story on CNN and every story on Bloomberg is bullish GOLD. When I notice that I get weary. At this point there is no reason to sell GOLD. In fact, it looks like a screaming buy, which also scares me. If you are buying a new GOLD position now, just have a stop-loss around $1000.

    At the end of the day, I see no incentive for the Gov’s to do anything but continue to engage in activity that will promote inflation, but hey, you never know.

    http://singerprofitcharts.blogspot.com/2009/10/guy-bagging-groceries-told-me-gold-just.html

  29. Bruce in Tn says:

    Andy just added you to my favorites list…now go out and find me an easy…(foolproof?) way to make money…

    Will try to read you daily…

    B in T

  30. JustinTheSkeptic says:

    Wage pressure. There are no wage pressures like there were back in the late 70′s, early 80′s. Unions were much more prevelent, and they were demanding inflation adjusted pay raises across the board. In my view this is an investor generated commodities bull, driven by Big Money’s (creditors), need to inflate there way out of this mess. There is no way that the likes of GS, want to eat all that debt. But that doesn’t mean that it won’t come any way given the state of the consumer. The direction of the consumer over the next 18 months is key. Lest we forget, commodities can go down just as fast as they go up.

  31. HCF says:

    Google is a wonderful thing:
    DJIA in gold:
    http://commons.wikimedia.org/wiki/File:DJIA_in_Gold.png
    (too bad it’s only up to 2/11/2009)

    Average home price, priced in gold:
    http://whiskeyandgunpowder.com/us-house-prices-in-gold/

    HCF

  32. urbandigs says:

    Franklyn – why does an economic calamity have to lead to a breakdown of civil society? Has it occurred to you that one can occur perhaps without the other? We went through a severe economic crisis, has our society broken down? No. Yet those investing in gold now have a higher worth than those investing in real estate or equities over the past 2-3 years.

    maybe its you that doesnt quite get it? If your fear is a total breakdown, utter chaos, and destruction everywhere, then sure go buy lead with your dollars and sit at your doorsteps shooting down any invaders that may swing by. Me, I just dont see that happening. Ill stick with gold as an anti-fiat currency trade when all fiat currencies are being systemically debased.

  33. dss says:

    @ellidc

    “However, for a interesting tour of how wealth historically has been preserved through breakdowns in civil societies, you could read Barton Biggs, War Wealth and Wisdom. In short, what has worked has been high value portables and out of the way farm land.”

    I actually have read Bigg’s piece, but the problem is that if you are lucky enough to survive, you still must defend your farm land and high value portables from the starving hordes of citizens and criminals.

    What we are talking about is a break down of society and how realistic is it that one could take their pieces of gold and actually be able to trade it for something before being killed?

    These speculations are sci-fi fantasies.

  34. [...] The Big Picture reminds us that gold, in real-terms has been much higher before. [...]

  35. [...] The Big Picture reminds us that gold, in real-terms has been much higher before. [...]

  36. Andy T says:

    “BR: Nonsense.

    Gold is a commodity, and like every other commodity, it is subject to the pernicious effects of inflation.
    I know you hate fiat currencies, but wishing them away won’t make it so.”

    Ummmm…..ok, if you say so.

  37. ellidc says:

    @SINGER
    I understand that Joseph Kennedy got out of stocks when the shoeshine boy started trying to give him tips. I get that. The weird sleazy cheesy aspect of the retail gold market is big red flag too. It is amazing too, how even in the internet age the spreads between dealers on common bullion coins stay so wide. So, yes, funny, maybe short term toppy.

    and btw Paulson repeated his stand on gold and time horizon of 5-10 years just a couple of weeks ago when gold was 1015.

    @dss
    Wealth destruction due to economic dislocation, whether or not it is accompanied by roving armed gangs, is hardly a fantasy. In the last 20 years you had Brazilian hyperinflation, Russian ruble collapse, Mexican Peso collapse, Argentine austral and peso collapse. You had more severe dislocations in the emerging economies of the former eastern bloc. It is very realistic that in such a situation you could use gold as a store of value. Those folks all used dollars.
    If the roving armed gangs ever do come, which I agree seems a bit of a fantasy here in the U.S., but certainly not the world, given the recent history of central america, Congo, Zimbabwe, Lebanon, Iraq, you may indeed lose the farm too and all the rest of your wealth too except what you can hide or carry out when you go.

  38. investorinpa says:

    Barry, your post strikes me as “Let me snub gold because I didn’t invest in it”. I don’t mean to come across about this in a negative way, but that was the first thing that came to mind. It was no different than when GE was around 5 bucks and now its at 15 and I snickered about how its low compared to its high, yet ignored the fact that friends that bought GE at 5 got an extremely nice return.

    So I ask you….do you have gold in your portfolio (either with your Fusion IQ arm or just personally)? Do you believe it is an asset class people should own, irrespective of its return (like real estate sometimes can be)? Just inquiring.

  39. The First Bank of the United States was created in 1791. Alexander Hamilton, the 1st Secretary of the Treasury, proposed this bank and convinced a hesitant President Washington to agree. John Adams and Thomas Jefferson were against the concept. It favored the moneyed classes of the North versus the agrarian South. The bank was given a 20 year charter and President James Madison let it expire in 1811. He then renewed the charter in 1816. The wise men who took unprecedented risks in declaring independence from England’s tyranny, feared the tyranny of bankers equally:

    “All the perplexities, confusion and distress in America rise, not from defects in the Constitution or Confederation, not from want of honor or virtue, so much as from downright ignorance of the nature of coin, credit, and circulation.”

    John Adams, in a letter to Thomas Jefferson, 1787

    “I believe that banking institutions are more dangerous to our liberties than standing armies. Already they have raised up a moneyed aristocracy that has set the government at defiance. The issuing power (of money) should be taken away from the banks and restored to the people to whom it properly belongs.”

    Thomas Jefferson, U.S. President -1802

    [The] Bank of the United States… is one of the most deadly hostility existing, against the principles and form of our Constitution… An institution like this, penetrating by its branches every part of the Union, acting by command and in phalanx, may, in a critical moment, upset the government. I deem no government safe which is under the vassalage of any self-constituted authorities, or any other authority than that of the nation, or its regular functionaries. What an obstruction could not this bank of the United States, with all its branch banks, be in time of war! It might dictate to us the peace we should accept, or withdraw its aids. Ought we then to give further growth to an institution so powerful, so hostile?

    Thomas Jefferson, U.S. President -1803

    “History records that the money changers have used every form of abuse, intrigue, deceit, and violent means possible to maintain their control over governments by controlling money and its issuance”.

    James Madison, U.S. President

    President Andrew Jackson was the first and only President in the history to pay off the National Debt. He worked tirelessly to rescind the charter of the Second Bank of the United States. His reasons for abolishing the bank were:

    · It concentrated the nation’s financial strength in a single institution.

    · It exposed the government to control by foreign interests.

    · It served mainly to make the rich richer.

    · It exercised too much control over members of Congress.

    · It favored northeastern states over southern and western states.

    President Jackson believed that only Congress should be responsible for the issuance and control of the currency. Delegating that duty to powerful New York bankers was distasteful to him.

    “If Congress has the right to issue paper money, it was given to them to be used … and not to be delegated to individuals or corporations”

    President Andrew Jackson, Vetoed Bank Bill of 1836
    http://theburningplatform.com/economy/grand-illusion—the-federal-reserve#
    ~~
    By Mary Pilon
    This may not come as a surprise: You are burning through cash today more quickly than ever before.
    The American Institute for Economic Research released their Cost-of-Living Guide yesterday, which monitors the purchasing power of the dollar over time.
    The report isn’t available online**, but its authors say that the purchasing power of the dollar has **decreased by more than 95% since 1913.
    History buffs will recall that’s the same year that Congress created the Federal Reserve System and left the gold standard in the dust. Tracking the Consumer Price Index since 1800, the Institute argues that the U.S. government has been “ineffective” when it comes to preserving the value of the dollar over time.
    Although the Consumer Price Index is an admittedly imperfect way to measure changes in the cost of living, it’s still one of the best tools we have for measuring how the prices of cars, bread or health care stack up in relation to our earnings.
    delsartebound.org
    We’ve highlighted some of the price indexes from the Institute’s chart. Here’s how certain goods have increased in price, measured by percentage, from 1990-2008: …”
    http://blogs.wsj.com/wallet/2009/01/28/the-buying-power-of-a-dollar-on-a-downswing/?mod=googlenews_wsj

  40. M says:

    @Mark E Hoffer

    Thomas Jefferson was a brave and talented man and a great force in the founding.

    But, he never understood finance (his own or the countries). He never made any money. He squandered two inheritances and in the end used his slaves as collateral for loans he had no ability to repay to keep himself elegantly housed. Hamilton was a self made man. He was no gentleman, but he knew money. If I had to choose one of those two to run my money or set-up the countries finances Hamilton wins hands down. Hamilton also “took unprecedented risks” making this country. The founders did not fear bankers equally. Many of them were bankers. There are arguments to be made about the need for and structure of a central bank and fiat currency but you seem to be suggesting they are unpatriotic. That strikes me as both bad history and pure ad hominem.

  41. [...] Ritholtz has a good chart, courtesy of Bianco Research, showing the price of gold in inflation-adjusted terms. As you no [...]

  42. Christopher says:

    I can’t see how this is anything but bullish for gold/silver values. I’ve been buying some silver eagles over the past year….but now I wish I had bought more.

    Saw this on ZeroHedge…
    http://www.usmint.gov/pressroom/index.cfm?flash=yes&action=press_release&ID=1070

    WASHINGTON – The United States Mint announced today that it will offer for sale 2009 one-ounce American Buffalo Proof Gold Coins and one-ounce American Eagle Platinum Proof Coins. The release dates for these products are tentatively October 29 and December 3, 2009, respectively. In addition, the agency will release the one-ounce 2009 American Buffalo Gold Bullion Coin on October 15 and the fractional 2009 American Eagle Gold Bullion Coins-in the one-half ounce, one-quarter ounce, and one-tenth ounce weights-on December 3.

    The United States Mint will not offer the following products in 2009: the one-ounce American Eagle Silver Proof Coin; the one-ounce American Eagle Silver Uncirculated Coin; the American Eagle Gold Proof Coins (all weights, as well as the four-coin set); the one-ounce American Eagle Gold Uncirculated Coin; the United States Mint Annual Uncirculated Dollar Coin SetTM, which also includes a one-ounce American Eagle Silver Uncirculated Coin; and the American Eagle Platinum Bullion Coins (all weights).

    Because of unprecedented demand for American Eagle Gold and Silver Bullion Coins, the United States Mint suspended production of 2009 proof and uncirculated versions of these coins. All available 22-karat gold and silver bullion blanks are being allocated to the American Eagle Gold and American Eagle Silver Bullion Coin Programs, as mandated by Public Law 99-185 and Public Law 99-61, respectively. Both laws direct the agency to produce these coins in quantities sufficient to meet public demand. The proof and uncirculated versions of the American Eagle Gold and Silver Proof Coins are not mandated by law.

    The United States Mint is working diligently with current and potential blank suppliers to increase the supply of bullion coin blanks, so it can offer to the public the proof and uncirculated versions of American Eagle silver, gold, and platinum coins in 2010.
    !!!!IS THIS A WTFOVER STATEMENT OR AM I JUST BEING PARANOID???

    The United States Mint, created by Congress in 1792, is the Nation’s sole manufacturer of legal tender coinage. Its primary mission is to produce an adequate volume of circulating coinage for the Nation to conduct its trade and commerce. The United States Mint also produces proof, uncirculated and commemorative coins; Congressional Gold Medals; and silver, gold and platinum bullion coins.
    —————

    It begs the question…WHAT IF the US Mint decides it can’t “offer to the public the proof and uncirculated versions of American Eagle silver, gold, and platinum coins in 2010″???

  43. M,

    this: “..but you seem to be suggesting they are unpatriotic.” I am, most certainly, not doing.

    this: ““All the perplexities, confusion and distress in America rise, not from defects in the Constitution or Confederation, not from want of honor or virtue, so much as from downright ignorance of the nature of coin, credit, and circulation.”
    –John Adams

    I will underwrite.

    and, you say: “There are arguments to be made about the need for and structure of a central bank and fiat currency..” If you would, be pleased to do so..

  44. Pat G. says:

    There are some very compelling arguments for gold here backed with good examples on reasons to buy which I have been stating on TBP since I started posting here. For those of you who scoff at the idea that gold is a store of value because you still view it as a barbaric metal, I wish you luck. If the USD goes into the toilet and you’re holding ETFs, Treasuries, equities, bonds, corporate, state or municipal debt or any other paper instrument backed by the full faith of the USG, you can only liquidate them in dollars. How long will that take? The DXY’s all time low was 70.70, today it is still above 76 and gold is at $1043. Get the picture?

  45. M says:

    Mark,

    I think I may have misunderstood your intent when you said “the wise men who took unprecedented risks in declaring independence from England’s tyranny, feared the tyranny of bankers equally.” From that I took your thesis to be that all the founders hated bankers and we should too. But, of course, you need not look hard to find founders who didn’t fear bankers. Hamilton was a banker and a favored aide to Washington in war and peace. If you’d written “many of the wise men” instead of “the wise men” I wouldn’t have bothered to quibble.

    And, I’m afraid my response was hurried and unclear. I intended to suggest that there are arguments for and against central banking and floating currency that don’t require the blessing or curses of the Founders (who, I think, had quite various views on the subject). I mentioned this purely as a counter to what I thought you were arguing (namely that the Founders distrusted banks and bankers so banks and bankers must be bad and un-American). I didn’t and don’t intend to go over the well worn arguments for and against (now working toward their third century in this country) in this forum. FWIW, my belief is that the bank has always been problematic in a democracy and some of the flaws we’re seeing in the current incarnation (secrecy, cronyism or the at least the appearance of it, and a great deal of power delegated to a very few largely un-checked and possibly un-balanced people) are flaws inherent in a independent bank. But, nasty though they can be, it’s hard to imagine a modern state without a central bank for all the reasons that Hamilton foresaw and, in the modern environment, to compete with the other central banks.

  46. DiggidyDan says:

    Thomas Jefferson is my second favorite president, behind Teddy Roosevelt. American badass. . . conservationist, and the only president ever to knife fight a cougar to death.

  47. [...] tip The Big Picture courtesy of Bianco [...]

  48. royrogers says:

    barry, according to the chart, gold should go to $3,000 ,
    yeppeee, there is still time to buy the shiny stuff.

  49. michaeld says:

    Gold is priced in dollars. In my opinion it all has to do with the value of the dollar. If it falls further, gold will rise further. But if the dollar reverses higher (e.g., due to stronger than expected GDP numbers in a couple of weeks), then gold price will go much lower.

    Nobody knows where the price of gold will be in the future. But if one uses a market timing system to enter and exit positions, then one may end up making lots of money. Buy and hold is dead as we knew it!

    Consider http://invetrics.com

    Its daily DJIA index trading signal is up significantly this year, and it is free of charge for individual investors. Timing signals work!

  50. JustinTheSkeptic says:

    Something to keep in mind gold bugs: it was a one day price spike that took the price of gold to $850 back in 1980. So if you smooth through the bottom of this spike it produces an equivalent of around $1,200 an ounce, not that far from today’s $1,048.

  51. Grand_Supercycle says:

    My monthly indicator for the USD is still giving bullish warnings.

    Will USD rally when bear market rally ends ?

    http://www.zerohedge.com/forum/market-outlook-0

  52. [...] Gold (Inflation Adjusted). The commodity is nowhere near its real record price. [...]

  53. [...] Previously: Gold Inflation Adjusted (October 7th, 2009) [...]