With the price of gold and silver pulling back, today it is a good idea for King World News readers around the world to take a step back and look at the big picture.
The following email was sent to us from a KWN reader: “If the price of one ounce of gold was $20.79 in 1913, what should its price be today in 2016 if we factor in the increase in the cost of living since then? John Williams’ inflation calculator gives the answer. He provides both the official inflation rate since may 1913, and his own alternate inflation rate which begins in 1980, when inflation was high. (1980 it seems was the start of systemic government manipulation of statistics and markets.) His (John Williams’) alternate graph (of the price of gold) is (a staggering) 5 times higher than the official graph.
The same procedure can be followed for one ounce of silver. I checked the historical chart for gold, and $20.79 was also the price of gold for several periods in the 19th century. (This being proof that gold does not produce inflation innately.) I have not yet seen the historical chart for silver.
I took 2 snapshots of the ShadowStats screens after its calculations and added the 5x multiplier to the pdf version. The pdfs are included (below) for your perusal.
Gold’s True Value Is Fascinating
In May of 1913, 1 once of gold was worth $20.79. In May of 2016, the official value (using the official U.S. BLS inflation calculator) was $514.90. The alternate value provided by John Williams is about $2,600.00 ($2,574.50), two times higher than the actual price, and four times higher than the official price (see bottom portion of graph below).
But Silver’s True Value Is Even More Stunning
The true price of silver is even more stunning. In May of 1913, 1 ounce of silver was worth $1.29. In May of 2016, the official (BLS) inflation rate indicates a price of $31.95, around twice the price of silver before this year’s increase. (However, according to John Williams’ Shadowstats), the alternate inflation adjusted price of silver should be about $160.00 ($159.75) according to the true method of measuring inflation (see bottom portion of graph below).
This short research answers the question, “What should the price of gold and silver be taking only true inflation into account?” I’m sure many have asked themselves this question. Of course, many other factors come into play as well. But the true inflation rate seems to me to be the the most important factor, (and) the foundation upon which to calculate the effects of the other factors.”
King World News note: The bottom line is that the price of gold, and particularly silver, are incredibly undervalued at today’s price levels. KWN readers must keep in mind that gold and silver will eventually move from incredibly undervalued to overvalued at some point during their secular bull markets and this will happen during the coming mania (phase III).
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