Gold vs the Dollar 1975 to the Present

Thanks to Bespoke Investment Group for this chart.

It's interesting to note that Bespoke says:
"Most people seem to believe Gold will continue higher and the Dollar will go lower, but contrarians have a pretty compelling case based on these charts as well."

I disagree on a couple of points. First, where was inflation in the mid 1970's into the early 1980's? It was very high. Now gold is back near these old highs with inflationary pressures but certainly not the same levels of inflation. Not even close. Second, the price of gold when adjusted for inflation is much lower, and yes I understand that the value of the Dollar adjusted for inflation is much lower as well. The fact is it is harder to produce gold than to print excess Dollars, Euros, Yen, etc. This argues for gold to continue to rise as long as the Fed persists in injecting money into the system.

With the recent Fed rate cut, it has been made clear that the the Dollar is less important than rescuing corporations, investors, and supposedly the economy.

Source: http://bespokeinvest.typepad.com/bespoke/2007/09/historical-ch-1.html