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When the price of gold fluctuates, you have to be careful inferring meaning - is it the value of gold fluctuating, or the value of the currency fluctuating?

It's not an easy question to answer.




No, it's a very easy question to answer. How many cups of coffee would a gram of gold buy me?

Yesterday morning, the London gold fix was 803.117 GBP/oz; if i took my gram of gold to my local baristas and traded it, i would get 6.59 flat whites. Yesterday morning, the gold fix was at 798.532 GBP/oz; my gram would have got me 6.55 flat whites.

Whereas if i'd gone in this morning with 4.30 GBP in ready money, i would have got 1.00 flat whites. And if i'd gone in yesterday with 4.30 GBP, i would have got 1.00 flat whites.

You can do this analysis against benchmarks other than flat whites: cappucinos, espressos, and even things that aren't coffee. You will always find that the buying power of a unit of currency remains constant from day to day, while the buying power of a unit of gold does not. It's gold that fluctuates.


how many coffees did your gram buy you in 1850 when these coins were minted?


Of course one could also argue it's not the price of gold that fluctuates, it's the dollar/euro/yen gold is measured in that does.




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