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XSauravX OP t1_j1gdpi2 wrote

Reply to comment by croninsiglos in Eli5 Why did Canada get rid of it's all gold? by XSauravX

What's the point in having 4% guaranteed income while inflation is 7% while gold stays neutral an ounce of gold is still an ounce of gold and usually if gold loses it value it recovers and everyone is fine but if the dollar starts gaining it's old value(deflation) everyone loses their shit

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croninsiglos t1_j1gdw4l wrote

How much did it cost you to house that gold, pay salaries for security, etc?

Due to inflation, the cost in gold is more and more for the same goods, because you still need to convert to the dollar.

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XSauravX OP t1_j1ge23i wrote

Pretty reasonable while looking at the ups

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MercSLSAMG t1_j1gmkg0 wrote

Gold value is related to the US dollar. An ounce of gold = a set amount of USD based upon commodity trading. So if the USD loses value so does gold.

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XSauravX OP t1_j1gmzap wrote

Actually it's just opposite the value of gold has risen and is at ATH rn while the USD is at ATL

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MercSLSAMG t1_j1gnqt2 wrote

If you want to buy 99.9% of stuff with gold you would first have to sell your gold to get a currency. And the exchange rate of gold is based upon USD per ounce.

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XSauravX OP t1_j1gny5m wrote

Yes and an ounce of gold has kept on rising Against the dollar it was around $21 or $34 in 1971 and it's over $1000 now

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MercSLSAMG t1_j1gqc65 wrote

https://www.macrotrends.net/1333/historical-gold-prices-100-year-chart

More like ~$300 USD/ounce. So you take into the inflation of the USD which is 1 dollar in 1970 is roughly 7.50 today - that makes gold not have any increase whatsoever vs. the USD. In fact it's almost identical to a 4% cash bond.

So investing in gold is like investing in cash bonds - which is to say it's a shitty investment to make money, but has near guaranteed value.

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XSauravX OP t1_j1gn204 wrote

Actually it's just opposite the value of gold has risen and is at ATH rn while the USD is at ATL

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