November 10, 2010

SHHHHHH!...WHO'LL PAY FOR RIGHTWING RADIO IF SUCKERS STOP BUYING GOLD?:

The Enduring Myth of Gold’s Record High (DAVID LEONHARDT, 11/10/10, NY Times)

Gold is at a record only if you fail to adjust for inflation. And you should almost always adjust for inflation. Otherwise, you end up with meaningless records — Gold reaches record high! Oil reaches record high! Lettuce reaches record high! — that depend on the fact that a dollar in 2010 does not have the same value as a dollar did in, say, 1980.

More than a month ago, Ryan Chittum of The Columbia Journalism Review noticed the epidemic of supposed gold records and urged those of us in the news media to stop. The actual record was set 30 years ago, when the price of gold, in today’s dollars, hit $2,387, or 71 percent higher than it closed on Tuesday.

This isn’t simply a question of math. Anyone who says gold is at a record high (or who said oil was several years ago) is getting the story wrong. Why? Because $10 today is not more valuable than $9 a few decades ago. Claiming otherwise is tantamount to saying that 10 rupees is more valuable than $9 because 10 is a bigger number than 9.

The notion that gold is more expensive than ever happens to fit with a larger narrative that also does not square with the facts — namely, that inflation is an imminent threat.

Posted by Orrin Judd at November 10, 2010 3:34 PM
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