This week, the price of gold reached an all-time high price against the U.S. dollar. It closed Wednesday this week on the COMEX at $1,953.50 per troy ounce, well above even intraday gold prices during the previous peak in September 2011. Gold had previously set all-time high record prices against almost every other world currency last week. However, this record-high gold price needs to be noted with an asterisk. The reason the asterisk is needed is that the value of the U.S. dollar itself has declined over the years. As a consequence, the price of gold this week, if compared to a U.S. dollar of consistent purchasing power, is lower than the previous peak price in September 2011 of about $1,924 and even further below the January 1980 peak of about $850. To give you some idea of the instability of the value of the U.S. dollar, just compare the M2 definition of the U.S. money supply, courtesy of the Federal Reserve Bank of St. Louis: January 1980: ...
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