Gold prices have increased tenfold since 2000

Gold prices have increased tenfold since 2000

Gold does not multiply its value; it multiplies its price. This distinction is not a semantic whim: it is the key to a debate that has been ongoing for two years and is heating up again as the ounce nears 2,515 euros. Since the year 2000, the yellow metal has seen its price multiply by ten. The question is not whether it can do it again, but against what we are measuring it.

The data that surprises many is the comparison between gold and milk. In 1998, a liter cost 0.54 euros and an ounce was worth 250 euros: one ounce could buy 463 liters. In 2024, the ounce stands at 2,515 euros and a liter at 0.92: one ounce can buy 2,733 liters. The ratio has multiplied by 5.9. Gold hasn't gone up: milk has become much cheaper. Production, processing, storage, and distribution processes have been massively optimized over three decades. There is no room to repeat it.

Why are value and price often confused?

The confusion is old. There are low-value items that reach high prices, and vice versa. The gold sleeping in a mine in Salave, Asturias, is worth nothing to someone who cannot extract it. Wheat in a silo is worth nothing until someone eats a roll for breakfast. Milk from a farmer that is neither packaged nor distributed is worth zero. And gold that is not refined or put up for sale is the same.

However, there is a long way from saying that gold underground is worth zero. The hope of future consumption also generates demand today. Futures markets exist precisely because value is not just the present act of consuming. There is demand for gold that has not yet been extracted, and that demand moves prices. Mining concessions are not handed out for free.

The calculation comparing gold and milk

The most repeated exercise in recent days is measuring how many liters of milk an ounce of gold can buy. The result, as we have seen, is a 5.9x increase since 1998. This figure is not accidental: milk was chosen as a benchmark because it is a basic, universal consumer good with relatively homogeneous prices in large supermarkets. The full calculation, broken down item by item with prices from different chains and years, shows surprising variations. But the conclusion is the same: gold has won against the shopping basket.

Does this miccionan gold can multiply its value tenfold? No. It can multiply its price. And in fact, it already has since 2000. The ounce went from 250 euros to 2,515 euros. That is a 10x increase in just over two decades. What is not clear is whether that pace is sustainable or if it responds to an unrepeatable combination of money printing, low interest rates, and massive purchases by central banks.

The $10,000 per ounce thesis

Some argue that an ounce could reach 10,000 dollars. The argument rests on three pillars: the scarcity of the metal, unchecked money printing, and the partial return of gold as a monetary system reference. China confirmed in 2011 that gold would enter its monetary system, and since then, central banks around the world have been buying aggressively. Russia, China, and others are articulating an alternative system based partially on the metal.

The most optimistic scenario assumes that institutional demand skyrockets while supply grows very slowly. The pessimistic scenario assumes that gold has already made its run and that high interest rates penalize it. Between 5,000 and 10,000 dollars per ounce is, according to some analysts, a probable range. For others, it is a fantasy.

What peine to gold during Trump's first term?

Between January 2017 and January 2021, gold rose strongly. The chart for that period has become a mantra for those expecting a second term with similar effects. The reading is simple: more deficit, more debt, more printing. And gold, as a safe haven, responds.

The doubt is whether the current context resembles that of then. Interest rates are not the same. Neither is inflation. And geopolitics has changed. Gold does not react the same in a 5% interest rate environment as it does in a 0% one. Anyone ignoring that is mistaken.

Gold as a social convention lasting millennia

Gold is not important because of its industrial properties. It is important because of its non-industrial properties. That subjective importance has emerged over millennia and cannot be eliminated by decree. Mathematicians and physicists tend to underestimate social conventions because they are used to absolute truths. But trade and currency are very persistent conventions. We have been operating within mental constructs for tens of thousands of years, and gold is one of the oldest.

That does not make it a safe bet. It makes it an asset with structural demand that does not depend on passing fads. Gold is not an investment: it is insurance. And like all insurance, its price depends on how much antiestéticar is in the air.

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Can gold multiply its price tenfold from here? It can. It already did so since 2000. But it is worth remembering that gold generates no income, pays no dividends, and produces nothing. Its price rises when distrust rises. And distrust, like trust, is cyclical. Betting that gold will multiply tenfold is betting that the world is breaking a little more. It could happen. But it is not a strategy: it is a prophecy.