Inflation Adjusted Gold Price

Is Gold in a bubble?

Read this first then answer the question above yourself, make your own judgement based upon the evidence.

This graph was takes from and shows the historical price adjusted for inflation and also the ‘real gold price’. The most telling part of this graph is the fact that with the last 9 years of consecutive Gold price increases we are still not yet at an all time high.

The graph below is one I have constructed myself from factual data to compare historical Gold prices against CPI data to more accurately illustrate the bottom section of the graph above.

Two factors are quite important to note with this expanded graph. Firstly that the current price is due to vastly increased demand through investment which is unaffected by inflation (though often drives it). Secondly that the rate of inflation used to calculate this graph is the CPI data given by the National Statistics Office, which is the government.

When I actually calculated the price of goods from the 1930’s, 40’s and 50’s and then adjusted them using the CPI data the prices were actually only about 40% of the price they were supposed to be. As we all know the CPI and RPI are adjusted yearly to only take into account the data that reflects the answers wanted and not a representative survey of actual price inflation.