Gold vs The Dollar: A Side-By-Side 100 Year Price Comparison. Which Has the Most Purchasing Power?

Thanks to Russia, gold has been in the news a lot lately:

The Russian central bank will restart buying gold from banks and will pay a fixed price of 5,000 roubles ($52) per gramme between March 28 and June 30, the bank said on Friday.

Read the full story HERE.

Another issue that concerns gold is inflation. There are many reasons why things are getting more expensive, but one factor that must be taken into account is the decreasing purchasing power of the dollar.

Since 1913, the purchasing power has fallen dramatically:

1913: $100
1923: $57.89
1933: $76.15
1943: $57.23
1953: $37.08
1963: $32.35
1973: $22.30
1983: $9.94
1993: $6.85
2003: $5.38
2013: $4.25
2019: $3.87

It’s obvious to everyone that things are more expensive than they were 5-10 years ago. Many experts estimate the dollar has lost 98% of its purchasing power as illustrated by this chart.

While many people think this shows items getting more expensive, it actually indicates the purchasing power of the dollar decreasing.

Money Printing: Dollar is Losing Purchasing Power

As we have seen over the years our dollars aren’t buying as much as they used to. One of the top reasons is excessive money printing. When money is being printed, its purchasing power decreases, causing prices to rise.

Meanwhile, central banks around the world are quietly increasing their gold reserves:

Even though gold isn’t discussed, many countries and central banks hold gold because it is an excellent store of value and is a hedge against inflation.

Saving Your Purchasing Power

Many people don’t know the dollar was once backed by gold. However in 1971, President Richard Nixon removed the “gold standard,” making the dollar fit currency. This meant the dollar could no longer be exchanged for gold, but many still view gold as a way to protect oneself from inflation.

How does gold compare to the dollar in terms of purchasing power? Here is a chart comparing the price of items in dollars and gold over the past 100 years:

1910’s

1 ounce of gold: $20.67

ItemCost in CollarsCost in Gold (Ounces)
Steak0.17 cents/pound.0082 ounces
Man’s suit$25.001.21 ounces
Car Model T$825.0039.91 ounces

1920’s

1 ounce of gold: $20.67

ItemCost in DollarsCost in Gold (Ounces)
Steak0.40 cents/pound.0193 ounces
Man’s suit$60.002.9 ounces
Car (average price)$260.0012.58 ounces

Thanks to factory assembly lines, the cost of producing cars decreased dramatically.

1930’s

1 ounce of gold: $20.67

ItemCost in DollarsCost in Gold (Ounces)
Steak0.43 cents/pound.02 ounces
Man’s suit$225.001.21 ounces
Car (average price)$600.0029.03 ounces

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1940’s

#vintage african americans from Stereo CULTURE Society

1 ounce of gold: $34.50

ItemCost in DollarsCost in Gold (Ounces)
Steak0.36 cents/pound.02 ounces
Man’s suit$25.00.724 ounces
Car (average price)$850.0024.64 ounces

1950’s

1 ounce of gold: $40.25

ItemCost in DollarsCost in Gold (Ounces)
Steak0.93 cents/pound.023 ounces
Man’s suit$36.95.92 ounces
Car (average price)$1510.0037.52 ounces

1960’s

See the source image

1 ounce of gold: $40.25

ItemCost in DollarsCost in Gold (Ounces)
Steak$1.05/pound.029 ounces
Man’s suit$79.502.18 ounces
Car (average price)$2600.0071.23  ounces

1970’s

See the source image

1 ounce of gold: $38.90

ItemCost in DollarsCost in Gold (Ounces)
Steak$1.30/pound.033 ounces
Man’s suit$56.951.46 ounces
Car Model T$3,45088.69  ounces

1980’s

See the source image

1 ounce of gold: $594.90

ItemCost in DollarsCost in Gold (Ounces)
Steak$3.89/pound.007 ounces
Man’s suit$199.000.33 ounces
Car (average price)$7,20012.10  ounces

Costs of items increased considerably in the 1980’s.

1990’s

1 ounce of gold: $386.20

ItemCost in DollarsCost in Gold (Ounces)
Steak$2.99/pound.008 ounces
Man’s suit$299.000.725 ounces
Car (average price)$16,95043.89  ounces

2000’s

See the source image

1 ounce of gold: $594.90

ItemCost in DollarsCost in Gold (Ounces)
Steak$4.81/pound.018 ounces
Man’s suit$475.001.74  ounces
Car (average price)$24,75090.78  ounces

2010’s

See the source image

1 ounce of gold: $1,420.25

ItemCost in DollarsCost in Gold (Ounces)
Steak$6.07/pound.004 ounces
Man’s suit$2000.001.41 ounces
Car (average price)$31,35222.07  ounces

2020

See the source image

1 ounce of gold: $1,900.00

ItemCost in DollarsCost in Gold (Ounces)
Steak$8.59/pound.007 ounces
Man’s suit$2000.001.65 ounces
Car (average price)$33,56027.85  ounces

Conclusions

These comparisons illustrate how much the purchasing power of the dollar has decreased over the years. For example, in dollar terms, a steak costs nearly 50x more than it did 90 years ago. Today’s cars cost 120x more now than they did in 1920.

Gold is money, and has been used for centuries to purchase goods and services. Unfortunately, this information isn’t readily taught or understood by the average person. While the dollar has steadily lost purchasing power, gold has held steady. For example, it takes less gold to buy a car today (27.85 ounces) than it did in the 1930’s (29.03 ounces).

We are taught to save dollars, but savvy investors understand the importance (and value) of gold. It’s not the price of gold that you look for, it’s how much can gold buy. In other words, the more gold a person has, the better.

By owning physical gold, a person can protect themselves from inflation and preserve their wealth. There are many places to purchase physical gold (and silver). One reputable place to purchase gold is Money Metals.

During these challenging times, it’s critical we work on improving our mental, physical, spiritual and financial fitness. Get more great investing strategies in my books and online courses on Udemy:

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