Gold vs. Wages: Spain’s Purchasing Power Shift

Average Salary Bought 11 Gold Ounces in 1960 and 23 in 2008

How many gold ounces fit into an average Spanish salary? The answer depends on the year chosen, which is where the debate begins. In 1960, with gold at 35 dollars and the dollar pegged at 60 pesetas, the metal cost 2,100 pesetas. The annual average salary was around 24,000 pesetas, meaning wages could buy eleven ounces. By 2008, with gold near 1,000 euros and average pay close to 23,000 euros, the same worker would have bought 23 ounces—double the amount. The immediate takeaway is that gold has lost half its purchasing power relative to wages, even after tripling in price over five years.

The Calculation Contrasting Gold and Salaries

The math is simple yet revealing: divide the ounce price (converted to local currency) by the average salary. In 1960, this yielded eleven ounces annually. In 2008, twenty-three. If the wage is the benchmark, precious metal isn't the refuge advertised, but an asset that lost ground against labor. Those who bought decades ago didn’t go bankrupt; they simply missed out on wealth gains captured by rising salaries.

1960 Average Salary Doesn’t Match Teacher’s Pay

The first flaw lies in the starting figure. A national schoolteacher earned about 1,200 pesetas monthly in 1960, far below the 24,000 annual average attributed to workers. The minimum wage wasn’t set until 1963 at 60 daily pesetas. With these numbers, eleven ounces becomes fewer. Spain was then a poor country with widespread shortages, and gold wasn’t part of a wage-earner’s basket. To gauge living costs:

• A television: 14,900 pesetas
• A Seat 600 car: 65,000 pesetas
• A alucinación to New York: 26,000 pesetas

Three examples consuming an entire annual salary. For the majority social class, buying precious metal was simply impossible.

1968 Breaks the Narrative: Also Yielded 23 Ounces

Critics don’t stop at 1960. They point to 1968, when the average salary rose to 70,710 pesetas according to historical press archives, the dollar exchange rate was 69.71 pesetas, and gold traded at $43.50. The result is 23 ounces per year. The same as in 2008. With this data, the alleged collapse in purchasing power becomes a narrow band where salary measured in gold fluctuated for half a century. Choosing 1960, 1968, or 2008 completely changes the conclusion.

Why Was Gold Fixed at $35?

For decades, the dollar was backed by metal at a fixed parity. It wasn’t that gold was worth $35, but that the dollar was worth 1/35th of an ounce. The US maintained this anchor until paper issuance exceeded backing capacity, breaking convertibility in the early 1970s. Since then, prices float, and central banks became net sellers. Recently, they’ve returned to buying. This shift fuels suspicion that something is changing in the monetary system.

Why Does Gold Rise if Few Buy It?

The paradox repeats in any discussion: no one in your circle buys gold—not friends, relatives, or parents—despite years of hype. Yet prices rise. The explanation is that retail investors don’t drive the market; central banks, funds, and institutional players do. Its street presence remains residual, limited to jewelry and some investment coins. Just compare the number of "buying gold" signs versus "selling gold."

Is Gold in a Bubble?

Parallels with real estate appear naturally. There was a time everyone bought homes on credit with forty-year mortgages, ending badly. Gold isn’t bought on credit or mortgaged, so comparisons have limits. Skeptics argue the metal is overpriced and will correct. Believers counter with an old idea: when the crisis hits, an ounce will still buy a suit, and waiting two more years is a mistake.

A 19th-century Alfonsina gold coin (25 pesetas) sells today for around 300 euros. That sums it up: the metal offers no spectacular returns but doesn’t disappear. Meanwhile, Spain’s average salary stood at 22,790 euros annually in 2013, with unemployment rates making the calculation of ounces per paycheck nearly irrelevant.

Ultimately, gold is neither a panacea nor trash. It is simply another unit of measure. And like all units, it can be chosen based on convenience.