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Saturday, 12 September 2009

Gold price high current value changes monthly

Real value is a constant, but, inflation-adjusted Historical Cost nominal monetary values change every time the Consumer Price Index related to the measurement unit, the US Dollar in the case of the gold price, changes.

For example, the gold price high of $2352.80 (CPI 215.351 07-09) on 21st January, 1980:

If inflation should increase dramatically in the USA and the CPI increases to 250 then the inflation-adjusted value for the 21st Jan, 1980 high would change to $2731.

Historical Cost nominal monetary values change every time the current CPI changes. That is logical. As current money is worth less and less as its real value is destroyed by inflation, past Historical Cost nominal monetary values have to be adjusted accordingly.

Historical real values are constant but their current nominal monetary values change every time the CPI of the respective monetary measuring unit changes.

This does not apply to monetary item values during the current financial period.

Gold is not a monetary item. Gold is a variable real value non-monetary item with its price expressed in terms of the US Dollar which is the monetary medium of exchange used.

Kindest regards,

Nicolaas Smith