Gold Is Near an All-Time Inflation-Adjusted Low

by Jeff Clark, Casey Research If you’re someone who’s skeptical of government-reported numbers, you’ll find the following chart confirms your suspicions. And if you’re someone who’s attracted to value, you’ll love the chart. There is a lot of criticism of the government’s CPI number simply because it doesn’t really seem to reflect what the average person experiences. Even with gas prices in decline, other segments of our society have seen prices accelerate. Healthcare and college costs are two biggies, rising far more than the current 0.2% reading. And many food items have scary trajectories—ground beef has more than doubled since 2010. Meanwhile, the gold price has fallen by roughly a third over the past three-plus years and been flat for the past four to five months. But is it a good value at current prices? Since 1980, the CPI formula has been modified at least a dozen times. Heck, they even implemented a new “estimation system” this year. Most nongovernment economists (like you and I) think those changes have made the reading less accurate, not more. So I asked John Williams of Shadow Stats to calculate the gold price in March 2015 dollars (the latest data available) based on the CPI-U formula from 1980. Here’s what he found. Adjusted for the 1980 inflation measure, the gold price is approaching its bear market low of 2001. In fact, gold is now below the 1975 price when it became legal to own it again! These data clearly show that when measured against a more realistic view of inflation, gold is dramatically undervalued. And with total worldwide debt levels up by a whopping $57 trillion since the end of 2007, the need to own it is as important as ever. Don’t worry about the current rangebound price. Buying now represents tremendous value and tremendous protection against the next economic crisis.

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