Stable buying power for hundreds of years

I’m a long-term gold holder and my faith in it will not change for very long time, if not in the rest of my life. With what’s going on around the world, gold will only become more valuable in the future. I cannot foresee anything at the moment that will change my view. I outlined before a few fundamentals that support a higher gold. Now a new research is just released, in which the author checked the data for hundreds of years from 1600 till now with the following methodology:

" When examining the value of gold we have to measure it in terms of goods and services. In this day and age one might forget the end goal of any participant in the economy is goods and services. All else traded in our vast financial system is merely a means to an end. All sorts of money, but also stocks, bonds, credit default swaps, options, futures, etc., have no use-value for humans as we can't eat, drink or wear them. Only goods and services we can truly use (for more information regarding use-value please read my post The Concept Of Money.) Therefor, to measure the stability of gold's value we have to compute the amount of goods and services gold can buy. For the sake of simplicity, we'll use publicly available Consumer Price Index (CPI) and Wholesale Price Index (WPI) data to measure the value of goods and services."



Here is the overall conclusion from the exercise:

“We can conclude, while there is no exact constant in economics, the stability of gold’s purchasing power is unprecedented. Not only on a gold standard the metal shows it’s constant nature, but also off the gold standard gold’s purchasing power is remarkably constant, albeit more volatile in the short term.”

 
Again, regardless how high gold will eventually go, it won’t be a straight line up. While gold is very constant in value, the traders on it are very emotional and can easily become very hyper and euphoric within a short time period to make it ahead of itself and then very depressed and pessimistic due to some short-term factors. As I have warned for quite some time in the past few months, gold has indeed entered a more serious correction at the moment. Baring from any black swan showing up suddenly, the correction may likely go for a while before we see a bottom. Who knows, maybe the upcoming presidential election could trigger its next bull leg up. As a longer term investor, I’m happy to see it go down more to allow me to buy more. As a trader, I’m happy to see the volatility that allows me to do swing trades and plant seeds for long term.