Afternoon everyone……
Well I’m finally done with the twelve days of Christmas posts. So it’s back to business now.
I’ve been wanting to do this post for a week now. But needed to get the Christmas ones done first.
So….
Everyone knows and has been feeling the cost of goods price increases. It’s been a struggle directly for me since I have to buy a commodity in order to make a living.
That commodity is lumber, but not just any lumber. I used furniture grade lumber and furniture grade plywoods, which have had an absolutely insane price increase. That increase has not come down at all yet.
While I’ve seen prices on dimensional lumber (meaning 2x4’s and such) coming down. The prices of construction grade plywood is starting to creep down. The price of furniture grade lumber and plywood has not.
This is not good for my business nor my income. I’ve only done two full kitchens this year which is 1/16th of what I did two years ago. Most of my work lately has been molding jobs.
Now let’s get into a little history of buying power. While this comparison might look a little ridiculous at first, I will explain it out after we take a look at it.
That’s just a comparison of what the $20 buys versus $20 today.
But…..
If you take the value of the gold in that $20 coin in today’s gold price….
The buying power is fairly accurate. There is .9675 ounces of gold in that $20 gold piece. This worked almost spot on before gold started tanking this week. But in order to show the example of what I mean.
There is $1728 worth of gold in that $20 gold coin at current spot price. The national average for a gallon of milk right now is $3.65. That would buy you 473 gallons of milk versus 479 back in 1932. The national average for a dozen eggs is $1.72, which would buy you 1,004 versus 1,385 in 1932.
Those of both extremely close to the same buying power as 90 years ago. While these numbers are lower at the moment due to the $100 drop in gold price. When I initially did this experiment two weeks ago, gold had a higher buying power then in 1932 except on gas and even that was only off by 14 gallons.
So to sum this entire routine up. Gold will always keep its buying power over time. It has proven it time and time again.