Today: 40th Anniversary of Nixon ending Gold Standard. 1 USD was worth 1/35th of an ounce of gold, now just 1/1750th. http://t.co/m3v2LeM
In 1971 you have $105.
$35 goes under the mattress, $35 into a savings account at 0.80% monthly and you buy a single 1oz gold coin.
In 2011 you awake from your coma and do some math to see about paying off that largish hospital bill.
Thanks to inflation, the buying power of the $35 under your mattress has been significantly reduced — most stuff that used to cost $35 in 1971 now costs about $250*.
Checking the balance on your bank savings account, it has $48.25 in there. Better than the $35 under the mattress, but it didn’t even keep up with inflation.
Checking your pockets, you find your gold coin. It’s now worth $1,700.
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I used to believe gold wasn’t a good investment. I still believe that — gold doesn’t give good returns in real terms.
However, when the world is devaluing its currency like mad, just holding your head above water is an accomplishment.