Cultural Affinity for Gold in China Could Fuel Rising Prices Globally

Gold has lost $170 since hitting a peak of $2,050 per ounce in early May.

But let's be fair to gold; it is up over 13% in the last year, 54% in the past five years, and 407% over the past 20 years.

It’s natural for investors to view the value of gold through the lens of its price in fiat money, especially the Federal Reserve note. Perhaps a more useful way is to examine how commodities are priced in gold. Oil has not risen for over 50 years when priced in gold.

GOP Rep. Matt Gaetz recently joked about the gold bar bribery allegations against Democratic Sen. Bob Menendez to make a serious point about inflation. Speaking on the House floor, Gaetz quipped,

"We are devaluing American money so rapidly that in America today, you can't even bribe Democrat senators with cash alone. You need to bring gold bars to get the job done just so the bribes hold value."

American Investors Are Missing the Gold Story

Of course, gold has risen in U.S. dollar terms over the past decade, but gold’s performance is more profound globally:

  1. Up 68% vs. the Chinese yuan
  2. Up 73% vs. the pound in the UK
  3. Up 80% against Canada's Loonie
  4. Up 100% in Japanese Yen
  5. Up 133% in Swedish krona,
  6. Up 200% in Brazilian real

China's recent gold buying frenzy has extended to 11 consecutive months.