How time flies, it was in 2020 when I wrote the last post about the gold spot price.
Since Q3 2020 we have had a number of rather major economic events happen worldwide.
I personally like the Austrian school economics definition of inflation as being an increase in the base money supply. By this metric there has been rampant inflation in many parts of the world over the last 3 years.
A huge effort has been placed into trying to convince people that inflation should be measured by indexes like the Consumer Price Index. This index is highly intellectually dishonest due to the way in which adjustments are made to prices but really only in one direction. Even by this metric, which systematically under-reports, inflation has been rampant. And this metric, however intellectually fraudulent it might be, has large implications because many things like "inflation" protected securities are indexed against CPI. The average person has been brainwashed into thinking that CPI measures inflation with many years of media messaging and official messaging doing everything they can to conflate the two. I remember a particularly egregious example of this when talking to my cousin who was studying a subject on economics at university, the course notes deliberately stated that inflation and CPI were the same thing. No Austrian school, or any other alternative, interpretations were anywhere to be found. There's an ongoing trend in the universities to try to tell people what to think rather than teach them how to think, which is particularly depressing in cases like this where what they are telling people to think is both missing crucial detail and nuance and is wrong in important ways. Defining inflation as anything other than the base money supply causes confusion, which is deliberate, but despite this deliberate confusion there is now no way to avoid seeing that we have a huge bubble in many prices along with a huge amount of base currency creation. What is interesting is to see the mental gymnastics that many people have had to engage in to try to explain what's happening in the world. One would have to be exceedingly delusional or out of touch with the markets to say that prices have not increased in the last few years on all the most important items.
During that time something strange happened, gold actually dropped in USD despite the base money rapidly expanding. There's a number of reasons why that happened but basically since then confidence has again eroded in fiat currencies, in part because of geopolitical upheaval, and gold prices have trended back up worldwide.
Much like how gold being available for purchase at 1000 USD per troy ounce is a thing of the past finding gold at 2000 USD per troy ounce will be a thing of the past barring a massive deflationary collapse bringing the base money supply down. A deflationary collapse like this seems at this point unlikely given the religious following Keynesian policies have in the west, meaning that deflation will attempt to be avoided at all costs. In the very short term however it seems likely that M2 will continue to decrease which could bring prices down temporarily, but there seems to be little political will to change monetary policy to be less inflationary which will create large upward pressures on commodity prices, when priced in ever expansionary fiat currencies, over the long term.