Monday, December 1, 2014

Inflation-Adjusted Gold Hits 5-Year Lows

Recently, gold hit $1,177 an ounce. When it did that, anyone who had bought gold in the last 5-years was losing money on their investment because $1,177 is a price that hasn't been seen since early 2010.

When you adjust the $1,177 in terms of the value of today's dollars, you literally have to go back to September/October of 2009 when gold was selling at around $1,061 an ounce; just to break even against inflation.  If that isn't enough to convince someone not to buy into all the  hype, then think about this.  Today, gold is selling at a 38% loss from its 2011 high of $1,904.

A lot of these gold bugs, who desperately want to sell you the loser gold that they are currently stuck with, are using all kinds of phony arguments to convince you that it is a great investment.

The typical claim is that it is protection against inflation.  This despite the fact that, over the last 5 years there has been about 8.5% inflation and gold has fallen on its tail; down 38%. Another is that gold is a protection against another stock market crash.  Well, today, the Dow Jones Industrial Average is at record highs and all of 2008 market crash losses have been erased.  At 17,828, the DOW is now 35% higher than it was in 2007 at pre-crash highs.

Finally, don't buy into the hype about silver either.  Its doing even worse.  When gold hit that 5-year low, silver also saw a low of $15.56 an ounce, you literally have to go back 6 years to see silver at that low.  Also, silver is down 68% from its 2011 high of $49 an ounce.


Inflation Calculator:

CNBC: Interactive Silver Chart:

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