The cost of living is falling fast, relative to Gold

Americans are feeling the pinch when it comes to price inflation. Rising prices are a political football with politicians on both sides of the aisle eager to pin blame on the other party.

Both sides are correct. Politicians, along with the central bank they created and continue to endorse, are fully responsible for the affordability crisis and the fading American dream.

Few young people can afford to buy a home. Simply paying rent and buying groceries is out of reach for some. Politicians may try to leverage this growing frustration, but their solutions have not helped.

Most Americans don’t understand the root of the problem. Prices are not going higher. Instead, the U.S. dollar (like other fiat currencies) is going down the drain.

If more people understood the yardstick that we use for prices – the dollar – was being debased, it would change the way they invest and save.

The best way to illustrate what is happening with prices is to use a different yardstick. Take a look at what has happened to prices measured against gold.

Housing is a good place to start.

According to the U.S. Census, the average home price in 2000 was $119,600. The average gold price for that year was $279/oz. That means it took roughly 429 ounces of gold to buy a home.

In 1970, it took 665 ounces of gold to buy the average house.

Today, the median home price is $410,000, while gold is currently priced at roughly $3,660/oz.

It now takes just 112 ounces of gold to buy a home. Home prices have fallen dramatically over the past 55 years, if you measure with a more reliable yardstick.

How would home affordability look for young people if they began saving for down payments using gold rather than dollars?

Let’s take a look at groceries. The typical U.S. household spent $1,140/year on groceries in 1970. That would have been the equivalent of 32 ozs of gold.

In 2000, the annual cost of groceries was $2,900.00 or about 10-½ ounces in gold equivalent.

Last year, the average household spent $6,053 on groceries, while the average gold price was $2,389/oz. The price of groceries relative to gold had fallen to just 2-½ ounces.

What happened to the cost of healthcare since 1970 is also interesting. Households spent $356 on average that year, not quite 10 ounces in gold equivalent.

Thirty years later, the average cost of healthcare in dollars had risen to $2,129. But it fell to about 7-½ ounces of gold.

In 2024, households spent an average of $6,168. That is just 2-½ ounces of gold equivalent.

The trend is similar for virtually all items included in Americans' cost of living. Costs are exploding in terms of dollars, but they are collapsing relative to gold.

It is, unfortunately, next to impossible for most Americans to completely avoid being caught by the decline of the dollar.

After all, wages are paid in dollars, and people need dollars to pay the bills.

Unless politicians are talking about a return to honest money – dollars which are redeemable in gold – they aren’t offering a genuine solution to the problem.

In the meantime, Americans should do what they can to implement a personal gold standard. That is to say, put excess savings into gold (and silver) rather than dollars and avoid investments in fixed dollar assets – such as CDs or bonds.

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