J.P. Morgan in his testimony before Congress famously stated that “Gold is money. Everything else is credit.”
To demonstrate the truth behind that statement, we have mapped out various currency depreciations over time, the USD, GBP and CHF covering a 56-year period from 1968; and China from 1994.
Despite disparate economic histories, the slope of depreciation in the various fiats are remarkably similar. At the end of 2023, the GBP had <6% of its purchasing power in real terms more than it did back in 1968, the USD <11%. The reason why the CHF performed better than its USD/GBP peers, ironically, is due to its continued large gold holdings.
China’s Yuan has lost >51% of its purchasing power in just 30-years.
The conclusion being, although sometimes volatile, the adjusted gold price over that same period has retained its purchasing power without peer. It’s worth while repeating, “Gold is money. Everything else is credit”.
