Trego's Mountain Ear

In 1971, gold went for $35 an ounce – until Nixon took us off the gold standard as a way to combat inflation.  Today, the price of gold is $2,425.55 – if we just look at gold, that January 1971 dollar had the purchasing power of $69.30 today.   But gold isn’t the only item we buy – matter of fact, I can go a long time without buying gold.  The chart below shows typical costs for items we can’t go long without purchasing.

Gasoline was 40 cents per gallon.  Now it’s somewhere between three and four dollars per gallon, and adulterated with alcohol.  Then it was adulterated with tetraethyl lead.  We aren’t buying the same gasoline.  Basically, that dollar in 1971 bought the same amount of gasoline as $10 does today –  not nearly so inflationary as the gold spot price might indicate.  This old ad gives an idea of the cost of groceries when I turned 21:

I don’t know if I can still buy a roll of film – the camera in the cell phone may have totally replaced that, with deflation.  In 1971, you had to be a university or a large corporation to buy a computer.  The Brown Box of Happiness delivered my computer for $210 – to the door.  No amount of money could have bought that simple HP back in 1971 – my Texas Instruments TI50 cost $150 back in 1974.  It would do most of the things my slide rule did.

Glancing at a 1964 advertisement, I see a Colt AR-15 listed at $189.50 – and back then you could get the things through the mail.  Today, Cheaper than Dirt lists an AR-15 at $419. 

It’s easy to look at inflation as both higher and lower than it is.  There are a lot of products that didn’t exist fifty years ago, and others, like film, that we no longer purchase.  One of these days I’ll do the math to see exactly what return on investment I missed by not buying an ounce of gold back in 1971.