Gold consolidates yesterday’s gains
Inflation numbers ‘lifting gold’s appeal’

(USAGOLD – 7/15/2021) – Gold is consolidating yesterday’s gains as bond yield tracked lower, the dollar gained marginally, and jobless claims came in as expected. It is down $2 at $1827. Silver is down 2¢ at $26.29. Media reports largely credited this week’s consumer and producer price reports for gold’s sharp advance yesterday. Reuters reported the inflation numbers as “lifting gold’s appeal.”

“The value of gold is constant,” writes analyst Kelsey Williams in a report posted at Gold Eagle. “Its price changes according to changes in actual purchasing power of the US dollar. Higher gold prices usually come after longer periods of time when the cumulative effects of previous inflation become more apparent. If you want to know and understand what is happening to gold’s price, then you need to know and understand what is happening to the US dollar. Changes in the price of gold do not tell us anything about gold. They tell us what is happening to the US dollar.”

Chart of the Day

Purchasing power of the U.S. dollar

Line chart showing the purchasing power of the dollar 1913 present

Source: St. Louis Federal Reserve [FRED], U.S. Bureau of Labor Statistics • • • Click to enlarge

Chart note: Since 1913, the U.S. dollar has lost almost 96% of its purchasing power. Since 1971 and the introduction of the fiat money system, it has lost 85% of its purchasing power. Since 2008 during a period of relative price stability, it still lost over 22% of its purchasing power. 

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