Better ratio

Reader comment on: Buffett on the Dollar and Gold

Submitted by John Gillis (United States), Feb 9, 2012 17:33

To use Buffet's date of 1965, but using the gold-dollar ratio as a test of inflation instead of the assumed government data that Buffet may have been using -- the ratio is 1 to 50, not 1 to 7. Gold in 1965 was 35.00, now it is about 1750 (average of the past few months). That would imply that a dollar is only worth 2 cents compared to 1965. The gold-dollar ratio is probably distorted a bit because the price of gold was being suppressed back in the 1960's, so the real inflation differential may not be quite as high as 1 to 50, but is probably way higher than the 1 to 7 Buffet uses.

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