Chart of the Day: Gold vs Hourly Wage

Today’s Chart of the Day comes from the Gold Market Chartbook and shows how many hours of work it takes to buy one ounce of gold. 

The past is no guarantee of future returns, but as Mark Twain said “… but it often rhymes.”  There have been sharp price declines in the past, two of the largest being 65% in 1985 and 35% in 2013.

In the future, a decline could be from:

• Higher real (after inflation) yields
• A rebound in the US dollar from improved fiscal discipline or economic growth
• The reduced demand from countries like China, who are large buyers.  

Finally, remember the old saying, “the cure for high prices is high prices.” It's important to remember that the supply of gold is not fixed and high prices spur more and more resources into mining it.