Gold vs. Money: Which Retains Its Value Over Time?
- ccancino3
- Oct 16
- 3 min read
Updated: Oct 17
For centuries money has been the dominant means of exchange. We use it to buy, sell, save, invest, and pay taxes. But have you ever wondered why money loses purchasing power, whereas gold strengthens over time?
What is Money and Why is It Worth Less and Less?
Modern money—banknotes, coins, and digital balances—is known as fiat money, meaning it is not backed by any tangible asset, but rather its value depends on the credibility of the issuing government.
However, since the world's major economies abandoned the gold standard in the 20th century, the amount of money in circulation has skyrocketed. For example, in 2000, the money supply in the United States was US$4.7 trillion; in contrast, by 2025, it will exceed US$22 trillion. This means that about 80% of the money currently in circulation was created in the last 25 years.
This phenomenon, known as monetary expansion, generates inflation: more money chasing the same amount of goods. The result: money loses value year after year.
Money: An Illusion?
According to the Austrian economist Ludwig von Mises, money does not have value by decree, but because it was once a commodity accepted in the market. This theory, known as the regression theorem, holds that the value of money is inherited from its past use as a tangible good, and that is, once supported by gold.
In other words, the banknote you carry in your wallet today has a certain value only because we all believe it has that value. But that value can deteriorate—and it often does—when governments print money uncontrollably.
Gold: Real Value Throughout History
Unlike fiat money, gold cannot be created out of nothing. Its existence in nature is extremely scarce, making its production limited and expensive. That is why for centuries and around the world, it has been considered a good with intrinsic value. For this reason, despite the existence of so-called “strong” currencies (like the Dollar, the Euro and the Swiss Franc), the central banks maintain gold reserves as a guarantee of stability
According to official figures of the Consumer Price Index (CPI) of the United States, during the period between June 1970 and June 2025, the dollar recorded a loss of approximately 88% of its purchasing power; meanwhile, gold multiplied 93 times its price during that same period. The difference is clear: Gold protects, money depreciates.
Analyzing it in comparative terms:
What one dollar could buy in the US in 1970, costs $8.33 in 2025 as a result of an accumulated inflation of over 730% during that period. Here's an example, based on the price of cars:
In contrast, an ounce of gold that cost $37 in 1970, is worth $4,233 in 2025 (Oct-15), an appreciation of +11,340% over that period.
Despite an accumulated official inflation of more than 730%, thanks to its appreciation of 11,340%, an ounce of gold can buy, in real terms, 14 times more in 2025 (Oct-15) than what it could buy in 1970.
What Should I Trust?
Modern money is useful for everyday transactions, but it is not a good long-term store of value. The purchasing power of money decreases over time, affecting the savings and their purchasing power. On the other hand, gold—with its scarcity, stability, and global acceptance—has proven to be a real safe haven from inflation, the crises a and excess money in circulation.
As money is printed uncontrollably, gold continues to shine as a reliable safeguard for assets, within a financial strategy that ensures the preservation of purchasing power.
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