Gold and Porsche: A Unique Comparison
Gold has always been a trusted store of value. One interesting way to understand this is by comparing the price of a luxury car, like a Porsche, with the price of gold. Over the years, the amount of gold needed to purchase a Porsche has fluctuated significantly. This change reveals important insights about gold’s value stability.
Source : IGWT
In 1965, it took 186 ounces of gold to buy a Porsche Coupe. By 1970, this number increased slightly to 243 ounces. However, in 1980, it sharply declined to just 45 ounces. This dramatic fall occurred because gold prices skyrocketed nearly 25 times during the 1970s. In the following decades, specifically the 1990s and 2000s, the amount of gold required remained relatively stable, ranging from 153 to 235 ounces.
A Big Drop in Gold Required
In 2010, the amount of gold needed to buy a Porsche had decreased to only 64 ounces. By 2020, this further reduced to 55 ounces, and it is projected that by 2025, only 40 ounces of gold will be needed to purchase the same model. Therefore, over the past 60 years, the amount of gold necessary to buy a Porsche has decreased by 78%.
Gold’s Purchasing Power
This decline in gold required is not due to a decrease in the car’s price. In reality, if we adjust the car’s price for inflation, we would find that it has not decreased this significantly. Instead, what has happened is that gold has maintained—and even enhanced—its purchasing power over time. This is why the same car now requires much less gold to purchase.
An Indian Example: The Five-Star Dinner Plate
To further illustrate this point, consider an example from India. In the 1980s, a dinner plate at a five-star hotel cost about ₹200, which at that time was equivalent to one gram of gold. By 1990, the price rose to ₹500, and in 1995, it reached ₹600. Today, the dinner plate costs between ₹7,000 and ₹9,000. Currently, gold is priced at about ₹9,500 to ₹9,700 per gram. Remarkably, one gram of gold still buys that dinner plate, indicating that gold’s purchasing power has remained consistent.
Have you ever compared prices in gold instead of currency? If you haven’t, give it a try! If you found this post insightful, feel free to SHARE it with your friends and family!
