Gasoline in Gold
Ounces of gold per gallon of gasoline · Quotes delayed up to 5 minutesThe number of ounces of gold required to buy one gallon of regular U.S. gasoline. The chart reveals that gas, in gold terms, has cost approximately the same — around 0.001 to 0.002 ounces — for the entire post-1971 period, despite gasoline’s headline dollar price rising more than tenfold since 1970. In gold terms, fuel has gotten cheaper over the same period. The chart is one of the most accessible ways to demonstrate that ‘inflation’ in commonly-purchased goods is largely a currency phenomenon, not a real-cost phenomenon.
Analyst's Note
Gasoline-in-gold reveals a counterintuitive truth: the major real-cost shocks in oil are visible (1973–1974 OPEC embargo, 1979 Iranian revolution, 2008 commodity peak), but they are dwarfed in magnitude by the persistent currency debasement that has produced higher and higher dollar gas prices. For the macro investor, this chart is one of the cleanest expressions of the ‘is it inflation or is it currency debasement?’ question. Both contribute to headline gas prices, but the long-running drift is overwhelmingly currency. The chart implies that an investor who held gold instead of cash over the past 50 years has experienced essentially zero increase in fuel cost over their lifetime — the dramatic rise in dollar gas prices is invisible from the perspective of a gold-denominated balance sheet.
The number of ounces of gold required to buy one gallon of regular U.S. gasoline. The chart reveals that gas, in gold terms, has cost approximately the same — around 0.001 to 0.002 ounces — for the entire post-1971 period, despite gasoline’s headline dollar price rising more than tenfold since 1970. In gold terms, fuel has gotten cheaper over the same period. The chart is one of the most accessible ways to demonstrate that ‘inflation’ in commonly-purchased goods is largely a currency phenomenon, not a real-cost phenomenon.
Analyst's Note
Gasoline-in-gold reveals a counterintuitive truth: the major real-cost shocks in oil are visible (1973–1974 OPEC embargo, 1979 Iranian revolution, 2008 commodity peak), but they are dwarfed in magnitude by the persistent currency debasement that has produced higher and higher dollar gas prices. For the macro investor, this chart is one of the cleanest expressions of the ‘is it inflation or is it currency debasement?’ question. Both contribute to headline gas prices, but the long-running drift is overwhelmingly currency. The chart implies that an investor who held gold instead of cash over the past 50 years has experienced essentially zero increase in fuel cost over their lifetime — the dramatic rise in dollar gas prices is invisible from the perspective of a gold-denominated balance sheet.
More in Purchasing Power
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