"When misguided public opinion honors what is despicable and despises what is honorable, punishes virtue and rewards vice, encourages what is harmful and discourages what is useful, applauds falsehood and smothers truth under indifference or insult, a nation turns its back on progress and can be restored only by the terrible lessons of catastrophe." … Frederic Bastiat

Evil talks about tolerance only when it’s weak. When it gains the upper hand, its vanity always requires the destruction of the good and the innocent, because the example of good and innocent lives is an ongoing witness against it. So it always has been. So it always will be. And America has no special immunity to becoming an enemy of its own founding beliefs about human freedom, human dignity, the limited power of the state, and the sovereignty of God. – Archbishop Chaput


Tuesday, August 9, 2011

Gold reaches its inflation adjusted high in Asian trading as Chinese buyers step in

The following chart is more for informative purposes than for trading but I did want to note that using the Federal Government's CPI data, (which is of course deliberately designed to underestimate the true rate of inflation), gold has effectively reached its all time high in terms of a monthly closing price in inflation adjusted terms. Whether or not this induces some profit taking among longs, particularly as global equity markets are now at this hour experiencing a rather sharp upside recovery after yesterday's pounding is as yet unclear but if we see a strong short squeeze in equities, watch for some profit taking to occur in gold. Already the metal is some $30 off its best levels of the evening.

We might also see a recovery in the gold mining shares if this rally continues into the New York trading session as those were moving higher yesterday before they succumbed to the general wave of equity selling.


  1. Hi

    didn't inflation adjusted price is around 2200 USD ?
    Even more I believe it was in that level 2-3 years ago.
    If you buy deflation, then yes, probably price "fell" to 1750 USD, but if you don't price must be higher now.
    I believe you can understand what I mean.

  2. If you use the shadowstats inflation number, it's more like 1/4 the way there.

  3. a paradigm change has happened as we expected.....and for all my gold bullishness it has even surprised me.

    "gold has priced in QE3" misthos at:


  4. @NMMM.NU
    Note that Dan is NOT using daily or weekly closing price! He specified only the MONTHLY closing price in gov't inflation adjusted terms compared to yesterday's POG. There is a big difference between the monthly and the daily (or between the monthly and the weekly).

  5. I wonder how many times in the history of mankind has gold been up $35 and silver down $1.50?

  6. This chart scares me. Just looking at what happened 31 years ago after the peak gives me butterflies. I know, this is "not 2008", nor is it 1980 and I realize the "official inflation numbers" by the government are nowhere near accurate, but still...

    the chart just really scares me.


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