The Impressive Long-Term Purchasing Power of Gold And Silver
The comments below are an edited and abridged synopsis of an article by Stephen Flood
There was a great meme on WallStreetSilver recently: “The True Value of Gold and Silver” compared how many ounces of silver it would take to purchase a Corvette in 1950 compared to today.
This is a great example of the value of silver over time. Flood reproduces the meme, but with the modification of the starting year of 1971, which is the year that President Nixon closed the gold exchange window.
A new Corvette in 1971cost $5,496. And that has increased to over US$67,000 in 2020, an increase of 1,235%.
In 1971, a Corvette would have cost 135 ounces of gold compared to 2020, when it was only 38 ounces of gold.
And when priced in ounces of silver, the Corvette in 1971 would have cost 3,572 ounces compared to only 3,308 ounces in 2020.
Flood includes a chart of the cost of a Corvette for all the years from 1971 to 2020, in the same three measures as above: US dollars, ounces of gold, and ounces of silver.
What we can see is that the cost of a Corvette in US dollar terms has risen steadily over the last 50 years.
The cost of a Corvette in terms of ounces of gold and silver has changed significantly, from as low as 21 ounces of gold and 63 ounces of silver in 1980. The price was as high as 149 ounces of gold and 9,259 ounces of silver in 2001.
So, yes, it is true that the number of ounces of gold, and of silver, it takes to purchase a Corvette has gone through cycles over the last 50 years. The point is that, although this purchasing power of gold and silver is disrupted in the short- and even medium-term, the long-term (50 years) purchasing power of gold and silver has remained impressively constant.