Even now, you quite often see clueless economists say that the Dow has outperformed Gold  prices significantly over time. This is untrue except in NOMINAL value.

Yes, the numbers are more, but these “analysts” fail to grasp the continual erosion factor, the destruction of the buying power of their favourite paper over time.

The excellent Dollardaze site have a great post up on the purchasing power of Gold vs Paper over time, we highly suggest you visit and read the full article after you’ve looked at some of their pretty pictures here..

today …

US Dollar purchasing power

UK GBP purchasing power

Interestingly enough, the remaining two currencies – the Japanese Yen and the Swiss Franc – displayed greater resilency to monetary inflation and depreciation. This is especially true for the Swiss Franc – the amount of Swiss Francs in circulation increased a relatively modest 280% over the same period. The explanation may lie in the fact that even though the Swiss Franc has not been technically (legally) convertible to gold, the Swiss Central Bank has attempted to maintain proper gold backing of the Franc, which in turn, had the effect of moderating inflation.

Gold Purchasing power

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