Relative purchasing power of gold?

[universalcurrency]

With the current boast in the price of gold, I have been thinking about the relative purchasing price of gold set against a basket of goods over time.

Just for amusement value I found a link relative to beer...

http://www.mining.com/this-65-year-beer-vs-gold-price-chart-is-the-only-one-you-need/

[sixgun]

[universalcurrency]

Thanks @sixgun, should have put the chart up!

[Paul]

Finally use of statistics & charts, that I can understand and relate to !  

[sixgun]

We can see the gold to beer ratio was pretty steady up until Nixon ended the convertibility of the USD into gold. Currencies and gold were tightly regulated. There were restrictions on people owning gold in many countries which helped keep gold demand down. The London Gold Pool operated in the 1960's to keep the Bretton Woods system working but it was so costly in physical gold, to suppress its price, it had to end. 

We see the pick up in the gold price after the London Gold Pool ended. COMEX trading started for gold in 1974 (replacement for London Gold Pool) and magically the price of gold fell but inflation was roaring away during the 1970's after the end of the Bretton Woods system and the introduction of a fully fiat world currency system. Governments had opened up the printing presses. We saw the appearance of the Petro-dollar and the fake oil shortage contrived by the US and UK governments with large oil companies. There were large increases in oil prices. The higher the price of oil the more dollars you need to buy that oil - so it gives a kick start to the Petro-dollar. This all ended up in the big spike in gold prices in the late 1970's and early 1980's. Higher oil prices were making everything more expensive. Things were getting out of hand and so quickly.

We then saw the gold price relentlessly beaten down into the early 2000's, the pinnacle of which was Brown's bottom when that traitor sold off much of the UK's gold to bail out Goldman Sachs et al who were heavily short. After all these criminal investment banks had helped central planners hammer down the gold price so they were let off the hook at our expense. 

The clowns kept on printing and speculating and gambling and stealing. We saw this inevitably culminate in the 2008 'financial crisis' followed by massive money printing with hidden $trillions being sloshed around the banking cabal. Gold did what is does and so we got repricing and a rise to the 2011 peak. Price was running away like in the late 1970's early 80's. Price got smashed - but they couldn't get the price down like before. i remember Goldman's talking about $800 gold - a barbarous relic blah blah - recommending clients go short - all the time they were taking the other side of these trades - going long and amassing gold.

Looks like a cup and handle has formed in the gold to beer chart - we can see their ability to control price is not as good as it was - looks like beer will be getting cheaper in gold terms again. The manipulation of the gold price is of course just a crazy conspiracy theory so ignore everything i just wrote.

[silenceissilver]

16 minutes ago, sixgun said:

Looks like a cup and handle has formed in the gold to beer chart

Does anyone know a good text or video where such terms are explained and it's not presupposed you know some financial trading language already? I have no clue what a cup and a handle is (although it seems quite obvious that it relates to the shape of the function) nor what it indicates.

I would add two things: Gold depreciated compared to beer before Nixon lifted the gold standard - it seems to me the printing press was already used but the appearance of convertibility was still intact. Another thing that strikes you immediately is that gold is currently above the average - which of course doesn't necessarily mean it's overvalued but could just as well indicate the price was suppressed for a good part of the last decades.

[HighlandTiger]

56 minutes ago, sixgun said:

Interesting. The beer price spiked in 1980 just when I started drinking beer, and hit a low in the early 2000's just when I quit drinking. 

 

I didn't think I drank that much to affect prices.

[sovereignsteve]

17 minutes ago, HighlandTiger said:

Interesting. The beer price spiked in 1980 just when I started drinking beer, and hit a low in the early 2000's just when I quit drinking. 

 

I didn't think I drank that much to affect prices.

other way round I'm afraid; the spike in 1980 refers to the highest amount of beer you could buy per ounce of gold, 227 litres. beer was therefore cheap when compared to gold, and vice versa in 2000

[sixgun]

Here is the cup and handle as i see it. It is a multi decade pattern in this case. We saw the peak in the early 1980's with gold in pints of beer coming down to bottom out in the early 2000's. Then it rose back to the 2011 peak. This is certainly not a perfect cup and handle pattern which would have the right lip of the cup on a level with the left but we are using a odd denominator as in the price of beer. Notice how smooth and rounded the cup is. Then we saw a pull back after 2011 followed by what we see now as a recovery from this pull back - the handle is forming. If this is indeed a cup and handle we would see further increase in the pints gold will buy.

Zerohedge discussed a multi decade cup and handle in silver last year - but not measured in beer.

https://www.zerohedge.com/news/2018-02-25/silver-mother-all-bullish-cup-handle-patterns

[HighlandTiger]

4 minutes ago, sovereignsteve said:

other way round I'm afraid; the spike in 1980 refers to the highest amount of beer you could buy per ounce of gold, 227 litres. beer was therefore cheap when compared to gold, and vice versa in 2000

Phew, I was getting worried there for a minute.

I feel happier now I know I was drinking beer on the cheap and gave up when it got relatively more expensive. 

 

[HighlandTiger]

5 minutes ago, sixgun said:

Here is the cup and handle as i see it. It is a multi decade pattern in this case. We saw the peak in the early 1980's with gold in pints of beer coming down to bottom out in the early 2000's. Then it rose back to the 2011 peak. This is certainly not a perfect cup and handle pattern which would have the right lip of the cup on a level with the left but we are using a odd denominator as in the price of beer. Notice how smooth and rounded the cup is. Then we saw a pull back after 2011 followed by what we see now as a recovery from this pull back - the handle is forming. If this is indeed a cup and handle we would see further increase in the pints gold will buy.

Zerohedge discussed a multi decade cup and handle in silver last year - but not measured in beer.

https://www.zerohedge.com/news/2018-02-25/silver-mother-all-bullish-cup-handle-patterns

If I tried to drink beer out of that cup, I'd spill it all down me. Not a good idea. 

[silenceissilver]

20 minutes ago, sixgun said:

Here is the cup and handle as i see it. It is a multi decade pattern in this case. We saw the peak in the early 1980's with gold in pints of beer coming down to bottom out in the early 2000's. Then it rose back to the 2011 peak. This is certainly not a perfect cup and handle pattern which would have the right lip of the cup on a level with the left but we are using a odd denominator as in the price of beer. Notice how smooth and rounded the cup is. Then we saw a pull back after 2011 followed by what we see now as a recovery from this pull back - the handle is forming. If this is indeed a cup and handle we would see further increase in the pints gold will buy.

Zerohedge discussed a multi decade cup and handle in silver last year - but not measured in beer.

https://www.zerohedge.com/news/2018-02-25/silver-mother-all-bullish-cup-handle-patterns

Thanks. I  was a bit confused over the term handle as to me that is something shaped like a C which would mean two different prices for the same asset, at one point in time. 

[universalcurrency]

26 minutes ago, sixgun said:

 but we are using a odd denominator as in the price of beer.

 

I had originally intended to find a grocery list vrs gold but couldnt find anything more useful....

[KDave]

Tesco has said it raising some of its beer prices 29%, a huge hit for gold. Tesco and the banking cartel are working hand in hand. 

[RacerCool]

Hmm. Maybe I should also be stacking beer. Its price might go to the moon some day. 🤔

(See what I did there? Yeah I know; beer won't go either.)