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.
Satisfied with your investments, you hop in your Corvair, get distracted upon hearing American Pie and wind up sideswiped by a bus.
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.
※ ※ ※
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.
*Thanks to Frink for the inflation calculation and BankRate for the savings account calculator.
