what does the gold price actually tell us?

  1. 630 Posts.
    Someone throw me a bone here - if the price of gold has gone up (say) 500pct or so in 7 or 8 years, but the price of a (say) can of soft drink is only double at best/worst what does that tell us about the price of the share market?
    If gold is NOT in a bubble then soft drink has to go up in price about $3 a can to regain its 'parity' as do a whole bunch of other goods and services, and wages at some point. As a logical follow on then the earnings and share price of companies that produce something need to go up too. Isn't that the whole point of gold - to act as a hedge against inflation?
    I accept that there may have been a lag period where some things went up in price and gold did not as 'everyone' was too busy trying to beat the market elsewhere - so some of the gold increase is catching up with inflation from years ago - but there seems to be a burst of inflation waiting just around the corner....
    The alternative is massive 'wealth' destruction where most of the debts don't get paid back - ah, I see where the gold thing comes in for some people .... ;)
    Good luck, DYOR, but I for one will be hoping for a mixed bag of commodities where the utility of the stuff is worth more than the 'gold standard' which the world moved away from decades ago and will probably never go back to. That's the twist in the tale in my opinion.
 
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