Gold prices then and now: a little perspective

The United States dollar and the dollar-denominated gold price almost invariably sit on opposite ends of a seesaw, so as the greenback has weakened, gold has headed toward the peaks it last saw in early 1980.

Yes, they’re prices we haven’t seen in 27 years, but here’s some perspective.

The peak of the gold market in 1980 came on January 21, when the London afternoon fix was exactly US$850 per oz.

If you plug that into the U.S. Bureau of Labor Statistics inflation calculator (at www.bls.gov), you find that the 1980 peak is US$2,150.69 in 2007 dollars.

It gets even better in Canadian-dollar terms. The January 21 price of US$850 translated to $988.38 at the then-current exchange rate; using the Bank of Canada’s inflation calculator (www.bankofcanada.ca), that comes to $2,457.77 in 2007 Canadian dollars, or US$2,577.63 at current rates.

So the gold market is still a long, long way from the exuberance (didn’t somebody once call it “irrational”?) of January 1980.

Another useful comparison is to US$35-per-oz. gold, first fixed in late January of 1934. At U.S. inflation rates, US$35 in 1934 is worth US$544.56 today.

The fixed gold price that was superseded by U.S. President Franklin Roosevelt’s devaluation of the dollar was US$20.67 per oz. — US$331.50 in today’s dollars if inflated from 1933, the last full year of pricing under the Coinage Act of 1792.