How Much Gold Can You Buy For £5,000: 2022 - 1972

Gold Through the Decades Video

We're often asked about historic gold prices so thought we would film a video to demonstrate how the price has changed throughout the years.    

Historic Gold Prices

We started filming the video on 1st August 2022. To keep the comparison consistent, we decided to take the gold price from 1st August (or, allowing for weekends, just after). We sourced the historic gold fix prices from the London Bullion Market Association (LBMA). 

What About Inflation?

Whilst £5,000 is a modestly large amount of money, it was worth significantly more fifty years ago. In 1972, £5,000 could buy you a house! The Bank of England's inflation calculator estimates it to be the equivalent of £47,822 in 2021. It should be noted that inflation statistics are notoriously difficult to calculate accurately, and are constantly adjusted.

To calculate inflation, The Bank of England examines the price changes in a generic basket of goods and services to calculate its figures. But a simple illustration of inflation can be shown when the currency is compared against just one good or service. This is what we have done with the pound sterling and gold.

By keeping the monetary figure of £5,000 as the constant, it shows the devaluation of the pound sterling in terms of gold. This inflationary pattern is more commonly observed by keeping gold as the constant: one troy ounce of gold was worth £28.09 in August 1972, but is now worth £1,444.86 in August 2022.

In times of inflation, fiat money decreases in value. People turn to safe haven assets in order to protect their wealth, which is why gold often rallies as inflation rises. 

Summary

Whilst our aim was to show the fluctuation of the gold price over time, we've also highlighted the devaluation of fiat money, a hot topic in today's economy! Since we posted the video we've had requests to make a silver version, or even one comparing gold to Bitcoin. Stay tuned!

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