Today Marks 40th Anniversary of the Dollar’s Divorce from Gold

[Kermee]

http://finance.yahoo.com/news/Today-Marks-40th-Anniversary-wscheats-1950132810.html

Some interesting tidbits:

As is well known now, though the dollar bought roughly 1/35th of an ounce of gold in 1971, today it buys less than 1/1750th. It gets interesting, however, when we notice just how little some things have changed in the last forty years.

Indeed, as Brookes calculated in his essential book The Economy In Mind, “In 1970 an ounce of gold ($35) would buy 15 barrels of OPEC oil ($2.30/bbl). In May 1981 an ounce of gold ($480) still bought 15 barrels of Saudi oil ($32/bbl).” Fast forward to the present, and an ounce of gold ($1750) buys roughly 20 barrels of oil ($85), but given the historical reversion to a 1/15 gold/oil ratio, it’s not a reach to suggest that oil is due for a spike upward to roughly $116/bbl assuming gold remains where it is.

Thoughts, comments, debate on some of the points in the article?  I found it interesting how closely 'oil' follows 'gold'...

Cheers,
Kermee

[1.21gigawatts]

hit’s not a reach to suggest that oil is due for a spike upward to roughly $116/bbl assuming gold remains where it is.[/i]

It's also possible that gold is due for a correction and will drop back down to 1/15 ratio assuming oil remains where it is

[evoorhees]

I think it's very smart to show the gold/dollar price expressed as "a dollar buys 1/1750th of gold"... it more clearly demonstrates that the value of gold is not rising, but rather the value of the dollar is falling. Throughout history, gold has held a remarkable steadiness in terms of purchasing power. Conversely, the USD has lost 97% of its purchasing power since 1913 when the Fed was created... and much of that occuring after 1971 when it was fully delinked from gold.

tl;dr - dollars suck

[zellfaze]

Isn't that the truth.

[Kermee]

tl;dr - dollars suck

QFT

Cheers,
Kermee