Do You Know the Right Price?
January 08, 2008
I think thanks are in order to the individuals who have posted comments on this blog in the past week or so. It has been hard slogging for casual readers with statistics of precious metals prices and rates of return posted.
I think the topics were worth covering from time to time. I have joked in this space that mentioning Britney Spears would get more attention. That is still true, but that is what gives the thoughtful people the edge in their numismatic hobby lives. Vicarious thrills are one thing, but they are not bankable in the long run.
Who was the Britney Spears equivalent in January 1980? I have no idea. Perhaps someone will be kind enough to post a name or two on this column to enlighten us.
Though few of us remember the pop cultural figures, we do remember the metals prices and consider them to be significant. We use this information to guide future decisions.
It has been pointed out that in inflation-adjusted terms that the price of gold is far below 1980's price. There is no question about that.
What focuses my mind on the question, though, is what is the appropriate value of gold relative to everything else? We can make a case that gold was too high in 1980 relative to everything else. It was too low in 1968 at the official price of $35 an ounce.
At those extremes, decisions to bur or sell might seem obvious. There were lines in front of coins shops in 1980 by individuals dumping their precious metal holdings as fast as they could. That should have told us something.
So far, that phenomenon has not occurred again here, but supposedly it has started in India.
Does it matter? Yes. Is it definitive? I don't think so.
Something to add? Notice an error? Comment on this blog.
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