Yard sale?
In a post below we discuss this chart:
The chart essentially says this, via WSJ: “Since 2001 the dollar price of oil and gold have run in almost perfect tandem. The gold price has risen 239% since 2001, while the oil price has risen 267%.” To put it another way, gold and oil cost about 3.5x their price in 2000. But let’s also consider the chart in this way:
If you were a holder of gold or of oil in 2000, buying assets denominated in dollars costs costs around 30 cents today versus a dollar eight years ago. The Sovereign Wealth Funds have almost $3 trillion today, Saudi Arabia’s new fund is thought to exceed a trillion dollars, China has $1.5 trillion in forex reserves, and $200 billion of that earmarked for acquisitions. However, relatively little acquisition activity of US stocks and US assets has taken place to date. We would expect to be seeing the greatest yard sale in American history taking place, but so far we haven’t. Why?
January 7th, 2008 at 11:58 am
I suspect you could run a chart like this for any commodity* for any ten year period in history, and the graph would look the same for gold, the commodity, and any fiat money.
It would be interesting to stick another commodity or two in there along with the pieces of paper.
*Except aluminum 1885-1895.
January 9th, 2008 at 2:55 pm
Gold up 239% oil up 267%. If you purchased your oil with gold, the price of oil is not up all that much. Inflation?