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horgad
1000+ Penny Miser Member
USA
1641 Posts |
 Posted - 10/30/2007 : 08:01:35
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quote:
Originally posted by Non-wise man
How would one solve, calculate or accomodate such a graph?
The biggest and hardest part of making that graph is coming up with accurate inflation data to adjust the 1998 dollar all the way back to 1344. What do you pick to use measure inflation and how do you do a currency conversion between a dollar and 1344 coin from some other country? In fact, after looking at the graph I seriously question the assumptions that must have been made to make it.
For example before 1965 you could buy over 1 Troy ounce of silver by going to the bank and asking for 5 quarters and 2 dimes or $1.45. In 1998 where the graph ends the price of silver was $6.24 an ounce. Roughly a 430% gain in silver or a 77% depreciation in the dollar (based on the silver price) in 34 years. Yet despite that apparent gain the graph shows a huge decline in 1998 dollar adjusted price of silver.
So the graph is essentially saying that silver went up by 430% from 1964 to 1998 but the dollar went down twice as fast as silver was going up so the real price of silver actually went down 50%.
The question is if you were an investor in 1964 (or 1364) what should you have bought that would have gone up twice as fast as silver and kept better pace with the dollar decline? Beats the heck of me, but whoever made this graph seems to think you could have done 2x better just by buying a basket of goods and watching inflation go up.
Personally, I dismissed the graph as invalid...
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Graph showing silver prices from 1344-1998
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