When the EUR/USD graph grow up exist 3 possibilities: or the USD grow up or the EUR down or both together. In EUR/USD, you need study two currencyies, EUR and USD, because these twos currencies are ‘very’ volatiles.
When you see the graph of the “GOOGL/USD” oscillating, again, it’s necessary make two analyses. One for the USD and another for the stock.
So, I guess this problem would be resolved if all actives would be like: EUR/GLD, USD/GLD, GOOG/GLD, OIL/GLD, ETF/GLD, XXX/GLD. Because the gold is the unique currency that not variable a long of time.
1 oz of GLD of 20 years ago is equal to 1 oz of GLD today.
But, 1 USD of 20 year ago is not equal to 1 USD today.
All currencies depreciated are depreciated by inflation and manipulated by government. The gold not.
Moreover, if the price of the GOOG/GLD (Gooogle/Gold) varies, you will have certain that the variation is due to Google and not to Gold.
im not sure if i got your massage correctly but hey lets give it a try.
gold is beeing traded in $. so any bigger changes to $ compared to other currencies aswell influences the gold price.
so in your logic you can out $/gold
or gold/$
up to you
the explanation of why $ and gold are connected is a bit more complicated and you can find it in various economical books of how the $ influences gold price and since you didnt ask that question i see no need to write a few hundret words to explain it here.
Edit:
ok now i understand what you meant: no it makes no sense, as then we would have in economical terms a deflation. that is why the gold standard for currencies got abandoned nearly a 100 years ago starting with united kingdom and france followed by USA. as the amount of gold on this planet does not increase anymore in sufficent enough speed but on the other side the amount of people increase in a much faster speed and the economies grow in a even much faster speed then that we can not go back to the gold standard we once had and you implified with your idea of paying with gold for stocks (which is the same like paying for stocks with a currency that is backed up by gold reserves the country of exactly that currency is holding)
unfortunately we need inflation in order to keep our economy running and the redestribution of wealth. you can read that up in the general theory of economics.
I guess that ideia of “gold price” is incorrect, the correct would be “dollar price”. The gold not should be measured by dollar, on the contrary, the dollar should be measured by gold. Actually, ALL should be measured by gold.
By definition, an instrument of measure should be invariable. 1 meter in US should be equal to 1 meter in europe. Today, yesterday, tomorrow, ALWAYS! The unique currency that satisfies this requisition is the gold. The dollar not, the euro not, the yen not.
Till the end of 18 the century, gold was considered as reserve currency and countries from all over the world used to trade in measure of gold. However, in early 19th century, analysts and economists realized the problem of gold as reserve currency as international price levels in terms of gold had just doubled in post- World War 1 relative to the pre- world war levels. The idea behind to shift away from gold standard was that in early 19th century major countries were not able to support their requirement with gold standard and they had to abandon it to support the military expense and imports. Initially, British pound was the world reserve currency as London was the hub for global trade and many countries found pound as good as gold, with the confidence in Bank of England that it would hand over the gold at fixed rate on presentment. But by the end of World War 2, US dollar replaced it as the world reserve currency and it has remained so since. The US accumulated the major chunk of world’s gold with wider margin from the second biggest holder of gold and it pegged its currency against the gold. Initially, major countries thought of returning back to gold standard, but they didn’t succeed as it could have led to deflation in all those countries.
Now in the globalization world, where we are seeing population and economies are growing rapidly we can’t return back to the gold standard. As the supply of gold is fixed but increase in demand of reserve currency would have lead its value sky rocketing and would have created financial turbulence in globalized world.
The price of Gold was decided by a little old man in an office in London until recently, so historical gold prices are kind of useless. The future price of Gold might make it the best investment you could ever make? Nobody has a crystal ball.
