Thursday, 29 September 2011

Updated Inflation Adjusted Gold Price - US Dollars and UK Pounds

Have recently found price inflation estimates for the UK and US back to 1900.  So I thought that I would extend the inflation adjusted historic gold price in UK Pounds and US Dollars from my original blog on the historical price of Gold, all the way back to 1900.  Below are the historic annual average inflation adjusted gold price in US Dollar and GB Pounds: 
        Sources: Gold World Gold Council,   US inflation Consumer Price Index (Estimate) 1800-2008
                      UK inflation Inflation: the Value of the Pound 1750-2002.

The doted lines are the unadjusted annual average gold price, and the sold lines are the inflation adjusted gold price.  The extended time allows us to examine the long running average inflation adjusted gold price.  The first thing that becomes obvious is that the piece gold bottomed out at during the late 1990’s was pretty close to the inflation adjusted price in the 1920’s, 1950’s and 1960’s for both $’s and £’s.

The second thing that you notice is that in the inflation adjusted gold price was from 1900-1915 and in the 1930’s were very close to that the early 1990’s.  The price at these times was very close the long running inflation adjusted average of US $483 per troy ounce and UK £344 per troy oz.  Below is inflation adjusted gold price index at 1948 = 100 (the same baseline used in the previous blog entry). 

Here you can see that there was a sudden blip in the inflation adjusted price of price of gold in UK £.  This was a bad economic period for the United Kingdom and the Pound Sterling was devalued in 1949.  So this is probably not the best time period to index to inflation adjusted gold price to.  Further examination of the first chart reveals that the 1900’s has a relatively stable inflation adjusted gold price in both Dollars and Pounds.  So the year 1900 was chased as the base to index the inflation adjusted gold prices to and the results are shown below: 
It is interesting to note the compounded rate of change for the inflation adjusted gold prices in Dollars and Pounds tracked each other very closely for the majority of the 20th Century.  There were a few periods when the inflation adjusted gold price index in Pounds was substantially above the Dollar equivalent.  The longest period was from the late 1940’ until 1970.  The other times were for a few years in the early 1970’s and early 1980’.

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