In 1906 an ounce of gold could have bought 690 hot dogs, as hot dogs cost 3 cents and gold cost $20.67 per ounce.
In 2025 an ounce of gold buys about the same number of hot dogs (675), as hot dogs cost $4, and gold is about $2,700 per ounce.
In 2000, Tiger Woods had the greatest season in golf history, earning $10.7 million in prize money. That same performance would have earned $92.3 million over the course of the 2024 season.
Not surprisingly though to any monetarist, gold cost $270 per ounce in 2000 and it costs 9x more ($2,400 per ounce) on average in 2024 (a price increase that matches the increase in PGA prize money).
The Best Financial Writer on the Internet
I shamelessly stole the above info from this recent column: Frankfurter Index – Reframing Energy Prices Through The Lens Of Hard Currency. It’s written by the best financial writer (Doomberg) on the internet, and I HIGHLY recommend subscribing to the free portion of his columns.
What Doomberg is illustrating is the monetary debasement/inflation that has taken place since Nixon took us off the gold standard (when dollars could ostensibly be exchanged for gold at a fixed price) in 1971.
What he is also illustrating is the primary cause of inflation – the creation of new dollars at a pace that exceeds the growth of our economy.
There is much talk right now about how falling energy prices will lower inflation, and/or about how tariffs will increase inflation. But those effects are minimal and easily offset by currency debasement, the creation of new dollars out of thin air, the creation of additional M2 money supply, or whatever you want to call it.
Economist Steve Hanke refuses to even call price changes, brought on by supply shocks or gluts, “inflation,” pointing out how those price changes are temporary. The only cause of inflation, per Mr. Hanke, is a change in M2 money supply.
And comparing the price of gold to almost anything that cannot benefit from the deflationary pressures of technology is a great way to see how quickly the dollar is getting devalued.
People get confused by the falling prices of TVs, computers, other electronics, microchips, and more – but those prices fall as a result of massive technological improvements and vicious competition even when the currency is getting debased. Without technology improvements and competition, inflation would likely be well into the double digit range.
People also get confused by the fact that the dollar is holding its value relative to other currencies.
But the reason the dollar’s value is holding up so well compared to other currencies is twofold: (1) other countries are printing more than we are; and (2) the dollar’s reserve currency status (most of the world borrows and trades in dollars) fosters immense demand for it, which props up its value.
Key Takeaways on Inflation and Asset Prices:
- Most of the price changes we see over the long run are not from shortages, surpluses, regulations, taxes, tariffs, supply chain issues, climate change, etc. They are from currency debasement, or when the supply of dollars increases at a faster pace than the economy is growing.
- Most of the asset price increases we see in stocks and real estate are not because those assets were brilliant investments; they are instead a result of currency debasement.
(Note: This is why government spending that results in more dollars and inflation is so unfair; it inflates the assets of the wealthy, while the middle class, with minimal assets, must deal with the inflation without the benefits of increasing asset prices).
- There is no stopping the currency debasement train. Mr. Trump might slow it down, but that train’s running too fast and too out of control to ever stop it. Politicians gotta spend…
So, once again, this is a huge reminder that housing remains one of the best hedges there is against currency debasement.
Every agent should tell every one of their clients that they need to buy a house ASAP because hot dogs only cost 3 cents in 1906.
And finally, here is a real estate to gold chart.
