Daily Dow: Cheaper than Dirt

For those of you not aware, there's a site out there that levels the playing field in terms of cost comparison. The PricedInGold website, hosted and run by Charles Vollum, is a fantastic source for price comparison and current economic understanding. If you would like to listen to a recent interview with Mr. Vollum, please CLICK HERE. There is one basic tenet you must accept, or at least suspend disbelief long enough, in order to fully understand and appreciate the information provided. You must approach with an understanding that gold is money... not a commodity. OK, in reality it's both, but that's why it's money. What gold is not, is a "speculative" commodity.
Now, for those of you incapable of viewing anything besides paper as money, for the sake of your education, pretend we're using any other commodity as the medium of comparison. In reality we all think this way, while our initial reaction at the grocery store is to count how many US Dollars we've spent, what we really do in the back of our heads is compare products to each other. We tell ourselves, we can buy two boxes of spaghetti or only one box of penne. We can buy our kids those toaster pastries which are unhealthy and expensive, or for the same amount of money actually fix them a healthy breakfast. We can eat for a week on a box of cereal or a month on a container of oatmeal. We all do this, so I'm asking, is that instead of thinking in terms of how many US Dollars something costs (because let's be honest, over the last 10 years the diminishing value of US Dollars and the inability for average household income to keep up has raised our cost of living and our blood pressure), think in terms of relative values between products. Too confusing to think of how many ears of corn compares to gallons of gas compared to your morning coffee and college tuition? That's where the single medium of gold comes in. Frankly, that has been the purpose of gold since we moved beyond etching paintings on cave walls and small tribes traded through barter into a more organized system. Information's great and all, but how is this practical? Information for its own sake is generally reserved for academics, but practice is what really matters to the rest of us. What you will learn by a little time spent on this site is that today, we live in one of the least expensive times in our history! It makes sense. 100 years of massive technological advances and we still enjoy the same coffee beans and sourdough bread we did back then. Technology should naturally cause price reduction over time, production costs should diminish and the amount of money in circulation to buy the same goods and services can be deflated. This is natural progression. Thousands of years ago most people were farmers, or they didn't eat. Today, a small handful of people have the ability to feed the world (why the world isn't fed today is a conversation for another day). If you compare these goods to each other and eliminate the Federal Reserve Note middle-man, this is exactly the case. So why does it make sense to view gold as a constant? Well the only other option is to argue that since 1975 or so, it's become 3900% more valuable (and at the highs of 2011 it was almost 5500% more valuable). I have a hard time swallowing that. It's industrial uses are certainly there, but nothing like other precious metals like silver. Jewelry production certainly hasn't increased that much, and mining production hasn't fallen off enough to increase the demand. Yet gold will continue to climb on international demand, despite US market analysts at the major media houses whose budgets are paid primarily by the Wall Street firms will try to tell you that gold is in a speculative bubble (which, according to them has perpetually and repeatedly already "popped" since about 2007 - see recent Roubini statements). So let's say I'm right. The majority of the world knows I'm right, and even a healthy minority of Americans do too, but let's just pretend that I am right and gold is actually the constant that levels the playing field for everything else. Then how can I possibly argue that goods and services today are the cheapest they've ever been when the constant we're measuring it against is itself at an almost 4000% return in terms of US Dollars had you owned it since 1975? Well, if gold is the constant, and as mentioned above technology and other factors decrease production costs and therefore should lead to decreased prices, then yes, things should "always" be cheaper as time marches on. A few examples of some everyday things (ok, so not everyone goes to Yale)...