The dollar valued in terms of gold:
Behind this pithy graphic is a serious issue. How do we measure value?
The paper currencies are (at best) elastic. Using a dollar to measure value is like using a rubber band to measure length.
Most people accept the Monetarist notion of using consumer prices to deflate the dollar. But consumer prices are subject to myriad and diverse forces (e.g. ever-improving efficiency; fewer labor hours and less land are needed to produce a ton of wheat today than in 1911).
Using consumer prices to “adjust” the price of gold would be like lining up a bunch of gummy bears next to the reference meter rod (under glass in Paris, it’s made of a platinum-irridium alloy). Be careful to estimate the fraction of a bear at the end.
Gold is the objective measure of value. This is because its stocks to flows (ratio of inventories to annual mine production) is higher than any other commodity by far. Despite ever-growing inventories throughout the ages, its value held up.
This is true for the dollar also: its value should be measured in gold. 100 years ago, the dollar was worth 1/20 ounce. Today, it is worth about 1/1800 ounce.
This graph is for all of those calling a “top” in the gold “bubble”.
The dollar hasta bounce. Gotta. Inevitable. Right?