Tuesday, January 04, 2011

Purchasing power of US dollar 1920-2009

The price of gold took a big hit today, something we noticed while having an interesting conversation about the dollar index and US dollar's recent strength (as measured by said index) earlier today on Twitter.

Still, we have to keep our eye on the big picture here. The long-term trajectory of the US dollar and its purchasing power, as measured against a constant store of value (such as gold), is down. Conversely, the longer-term trajectory of the dollar price of gold is up.

Food for thought.

Related articles and posts:

1. Bloomberg: weak dollar, inflation "illusory" - Finance Trends.

2. Dollar's purchasing power annihilated - Zero Hedge at Seeking Alpha.