Silver Rises Over 120% YTD 
- In August 1971, one ounce of gold bought 2.94 dinners at London's Savoy Grill. By January 2026, it bought 13.98 — a 4.75x increase in real purchasing power over 55 years (Equitile Investments, "The Savoy Gold Ratio," January 30, 2026).
- The US dollar has lost over 96% of its purchasing power since 1913. One ounce of gold has tracked the price of a quality men's suit for the entire century (Bureau of Labor Statistics, CPI Historical Data).
- The purchasing power of gold is anchored by supply scarcity — gold production grows at roughly 1.5–2% per year, closely matching real economic output, while fiat money supply has no such constraint (World Gold Council, Gold Demand Trends 2025).
- Central banks added 863 tonnes of gold in 2025. They aren't buying it for the price appreciation. They're buying it because it holds purchasing power outside the financial system (World Gold Council, Gold Demand Trends 2025).
- The right question isn't "where is gold's price headed?" It's "how much of my purchasing power do I want held outside the system that systematically erodes it?"
Here is a dinner reservation that tells you more about gold than any price chart.
On January 7, 2026, Dr. George Cooper — Chief Investment Officer and Founder of Equitile Investments — sat down for dinner at London's Savoy Grill. He priced the meal not in pounds, but in gold.
Working from a Savoy Grill menu dated August 19, 1971, Cooper estimated a comparable dinner cost £5.67 per head. That was four days after President Nixon ended the gold standard. With gold at $40 per ounce and the pound pegged at 2.40 to the dollar, one ounce of gold was worth £16.66. It bought 2.94 dinners. On January 7, 2026, with gold at $4,460 per ounce and the pound at 1.35, one ounce of gold was worth £3,303. The dinner cost £236.32 per head. It bought 13.98 dinners (Equitile Investments, "The Savoy Gold Ratio," January 30, 2026).
In 55 years, gold went from buying dinner for three people to buying dinner for fourteen.
The Savoy Gold Ratio — revived by Dr. George Cooper of Equitile Investments — shows gold didn't just preserve purchasing power over 55 years. It increased it 4.75-fold, while the British pound lost approximately 97% of its purchasing power across the same period (Equitile Investments, "The Savoy Gold Ratio," January 30, 2026; Bank of England Inflation Calculator). The metric was originally developed by Julian Baring — specialist gold fund manager and member of the Baring banking dynasty — during his City of London career in the 1980s and 1990s. Baring's insight was blunt: stop measuring gold in currency. Measure it in what actually matters — what it buys.
What Is the Purchasing Power of Gold, and Why Does It Matter?
Most investors think about gold the wrong way. They open a price chart and ask: is it up or down? But that question gets the relationship backwards. The dollar is the measuring stick. Gold is the thing being measured. When the dollar loses purchasing power — which it has done persistently for over a century — gold's price rises not because gold changed, but because the measuring stick shrunk.
To understand the purchasing power of gold properly, ask a different question: what can one ounce buy today, and what could it buy fifty years ago?
History gives a clear answer. Gold hasn't just held purchasing power over long horizons. It has increased it.
Your Gold Buying Guide Most investors overpay when they buy gold. Then overpay again when they sell. This guide shows you exactly what to own — and why.
The Savoy Gold Ratio: 50 Years of Purchasing Power in One Dinner Table
Julian Baring developed the Savoy Gold Ratio during his career as a specialist gold fund manager in the 1980s and 1990s, as the consequences of Nixon's August 15, 1971 decision played out across Western currencies. His argument was simple: measuring a Savoy dinner in pounds was pointless. The pound was being debased in real time. In gold, the price told an entirely different story.
As Baring wrote in one of his investor letters, he regarded gold as a form of currency — and believed that if you held an ounce for 20 years, it would buy the same number of Savoy dinners at the end of that time as it did at the beginning.
He was conservative. Dr. Cooper's January 2026 analysis showed gold didn't merely hold its Savoy purchasing power — it increased it 4.75-fold. One ounce covered 2.94 dinners in August 1971. By January 2026, it covered 13.98. The British pound lost approximately 97% of its purchasing power across the same 55 years (Equitile Investments, "The Savoy Gold Ratio," January 30, 2026; Bank of England Inflation Calculator).
This is not coincidence. It is a mechanism — and it explains the purchasing power of gold across every benchmark we have data for.
Why Does Gold Preserve Purchasing Power? The Mechanism Behind the Data
Gold preserves purchasing power because its supply is physically constrained — in a way fiat currency is not.
Fiat currencies can be created in unlimited quantities. When governments need to fund deficits, central banks expand the money supply: printing currency, buying government bonds, suppressing interest rates to encourage borrowing. Each new unit in circulation makes every existing unit worth a fraction less. That's monetary debasement — the gradual, systematic dilution of a currency's purchasing power.
Gold cannot be debased this way. Supply grows at roughly 1.5–2% per year, closely tracking real economic output, because mining new gold requires years of capital, geological luck, and industrial extraction. Above-ground stocks totalled approximately 216,265 tonnes at end-2024, growing at 3,300–3,700 tonnes per year (World Gold Council, Gold Demand Trends 2025). No government can change that with legislation.
The divergence since 1971 is stark. The Federal Reserve's balance sheet grew from roughly $900 billion in 2008 to over $7 trillion by 2022 (Federal Reserve, H.4.1 Statistical Release). US M2 money supply expanded from approximately $620 billion in 1971 to over $22 trillion by April 2026 — an increase of roughly 3,500% (Federal Reserve / FRED, M2 Money Supply). Meanwhile, gold's dollar price moved from $35 in August 1971 to over $4,000 in June 2026 — an increase of approximately 11,400% (goldsilver.com/price-charts/).
That price rise outpaced M2 expansion by more than three to one. This divergence is the core mechanism behind the purchasing power of gold — and it explains why gold didn't just preserve purchasing power since 1971. It increased it.
Gold vs. Dollar Purchasing Power Since 1971
Both indexed to August 1971 = 100 · Nixon ends gold standard Aug 15, 1971
Sources: Bureau of Labor Statistics (CPI) · LBMA historical gold price data · goldsilver.com/price-charts/ · Both series indexed: August 1971 = 100. Log scale. Gold data reflects annual averages.
The Gold Suit: 100 Years of Consistent Purchasing Power
The Savoy Ratio covers 55 years. For a full century, consider a simpler benchmark: what does one ounce of gold buy in men's clothing?
In the 1920s — Prohibition, the Great Gatsby, tailored suits — a quality garment cost approximately $20–$30. Gold was fixed at $20.67 per ounce. That ounce bought a suit.
A century later, a quality suit from Brooks Brothers, Canali, Ermenegildo Zegna, or a bespoke Savile Row tailor runs $4,000–$5,000. Gold trades near $4,074 per ounce. One ounce still buys a suit.
The suit hasn't fundamentally changed. The wool, the canvas, the hand-stitching — all comparable. What changed is the currency measuring it.
The US dollar has lost over 96% of its purchasing power since 1913. A 1913 dollar is worth less than four cents today (Bureau of Labor Statistics, CPI Historical Data). That $25 suit from the 1920s? The same dollar amount now buys a tie.
Savoy dinners. Men's suits. Different benchmarks, separated by a century. The pattern is the same. Priced in fiat currency, both costs soar over decades. But when measured by the purchasing power of gold, they hold steady.
How Does Gold Compare to Other Assets as a Store of Purchasing Power?
Gold's critics are right about one thing: equities have outperformed gold on total return over the past century. The S&P 500 has compounded at approximately 10% annually over long periods, including dividends (NYU Stern / Damodaran, Annual Returns on Stocks, T.Bonds and T.Bills: 1928–2024). Gold hasn't matched that.
But the comparison misses what gold is for.
Stocks are ownership claims on productive businesses. When companies earn profits, stockholders share in that wealth creation. Gold creates nothing — no dividends, no interest, no cash flows. Gold's job isn't to compound wealth. It's to preserve purchasing power when the things that compound wealth break down.
And they break down. In 2000–2002, the S&P 500 fell approximately 49% from peak to trough. From October 2007 through March 2009, it fell approximately 57% (Federal Reserve History, "The Great Recession and Its Aftermath"). Both times, gold held its value and rose. During calendar year 2008, while global equities fell approximately 38%, gold returned approximately +5% (World Gold Council, Gold Returns Data).
Criticizing gold for underperforming stocks is like criticizing fire insurance for underperforming the stock market in years when your house doesn't burn down. Gold is the floor under your purchasing power — not the engine of your returns.
Cash earns interest, but rarely enough to beat inflation. When central banks hold real rates below zero — as the Federal Reserve did from December 2008 through 2015, and again from 2020 through early 2022 — cash savings are a guaranteed slow leak of purchasing power. Real estate appreciates, but it also requires maintenance, taxes, illiquidity, and concentration risk.
Gold's specific role: to hold value when everything else is under stress. Not competing with equities for growth capital. The anchor, not the engine.
What the Current Gold Price Tells You About Purchasing Power in 2026
Gold traded near $4,074 per ounce as of June 26, 2026 — down from record highs above $4,500 in spring 2026, but still up approximately 25% year-over-year (goldsilver.com/price-charts/).
At $4,074, the Savoy Gold Ratio holds. The Gold Suit ratio holds. The structural relationship between gold and real goods is intact.
The more important question isn't what gold buys today. It's what gold buys in twenty years — and whether the dollar will buy as much.
The structural forces behind a century of fiat debasement have not reversed. Global sovereign debt exceeds $100 trillion (International Monetary Fund, World Economic Outlook, April 2026). The US national debt stood at approximately $39 trillion as of June 2026 (US Treasury Fiscal Data, Debt to the Penny). The Congressional Budget Office projects debt held by the public will reach $49.6 trillion by end-2034 (Congressional Budget Office, Budget and Economic Outlook 2025–2035). At these debt levels, governments have a structural incentive to inflate. Inflation shrinks the real value of outstanding debt. The cost falls on everyone holding the currency.
Central banks understand this clearly. The World Gold Council's 2025 Central Bank Gold Reserves Survey found that 95% of central bank reserve managers expected global gold reserves to increase over the next 12 months — the highest reading since the survey began (World Gold Council, Central Bank Gold Reserves Survey 2025). Central banks collectively added 863 tonnes of gold in 2025 (World Gold Council, Gold Demand Trends 2025). That accumulation isn't driven by quarterly price expectations. Rather, it reflects a clear-eyed understanding of what gold is: a reserve asset outside the financial system that maintains purchasing power through cycles that erode everything inside it.
The Second Corner: Gold Is Not Reactive. Currencies Are.
The conventional story frames gold as a fear trade. War comes, gold goes up. Confidence returns, gold goes down. By this logic, gold is reactive — a sentiment barometer.
The Savoy data tells a different story. Gold isn't reactive. Gold is the fixed point. Currency instability is what becomes visible when you measure it in gold.
Since August 1971, one ounce of gold has lived through the Vietnam War, the 1973 oil shock, stagflation, four recessions, the dot-com crash, the 2008 financial crisis, COVID-19, the sharpest inflation surge in forty years, and the most aggressive monetary tightening cycle in four decades. Through all of it, gold tracked the cost of a Savoy dinner. The pound and the dollar, meanwhile, lost approximately 97% and over 90% of their purchasing power respectively (Bureau of Labor Statistics, CPI Historical Data; Bank of England Inflation Calculator).
Gold didn't react to those events. Currencies debased through them. Gold held its position while the measuring stick got shorter.
This reframe has a practical consequence. If gold is the fixed point, "Is now a good time to buy gold?" is the wrong question. The right question — the one that correctly frames the purchasing power of gold as a long-term store — is this: "How much of my purchasing power do I want held outside the system that systematically erodes it?"
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People Also Ask
Does gold always preserve purchasing power, or can it lose ground over decades?
The purchasing power of gold is reliable over multi-generational horizons — but it can underperform for extended periods, including spans of twenty years. From January 1980 to August 1999, gold fell from $850 per ounce to approximately $255 — a nominal decline of 70%, and steeper still in real terms (London Bullion Market Association, historical gold price data). The mechanism: rising real yields. Federal Reserve Chairman Paul Volcker's early 1980s rate hikes crushed inflation and delivered a sustained era of positive real interest rates. When bonds pay genuine positive real returns, there's a real opportunity cost to holding a non-yielding asset like gold. That cost was high for twenty years. It eroded gold's purchasing power accordingly.
Gold's purchasing power record is robust over half-century and century timescales — which is precisely why the Savoy Gold Ratio and the gold suit comparison span those horizons rather than decade-long windows. Those who expect gold to preserve purchasing power in every rolling five-year period will be periodically disappointed. But those who hold it as a multi-generational purchasing power anchor will not.
How does silver's purchasing power compare to gold's over time?
Silver preserves purchasing power directionally over the long term — but the purchasing power of gold has proved more consistent over the past century, because silver's demand splits between monetary and industrial uses in a way gold's does not. Approximately 58% of annual silver consumption is industrial: electronics, photovoltaics, medical devices (Silver Institute, World Silver Survey 2025). For gold, the industrial share is roughly 7–8%. That difference matters. Silver's purchasing power tracks economic cycles as much as monetary ones. In industrial contractions — 2008, 2015, 2020 — silver fell harder and faster than gold every time.
Supply compounds the issue. Roughly half of annual silver production comes as a by-product of base metal mining — copper, zinc, lead. Silver supply doesn't respond cleanly to precious metals demand. The gold-to-silver ratio has ranged from roughly 15:1 under the 19th-century bimetallic standard to over 120:1 at the March 2020 COVID low, and sits near 70:1 as of mid-2026 (LBMA, historical ratio data). For purchasing power preservation specifically, gold has the cleaner century-long record. Silver's long-run case rests more on industrial demand growth than on monetary scarcity.
Does gold preserve purchasing power in currencies other than the US dollar?
Yes — and in some cases, more dramatically. The rule holds across every major fiat currency: the more aggressively a central bank expands its money supply, the more dramatically gold outperforms in local-currency terms. In British pounds, the Savoy Gold Ratio shows gold's purchasing power increased 4.75-fold between August 1971 and January 2026, while the pound lost approximately 97% of its value (Equitile Investments, "The Savoy Gold Ratio," January 30, 2026; Bank of England Inflation Calculator). Japanese investors saw gold more than triple in yen terms between 2012 and 2024 as the Bank of Japan held rates near zero and the yen fell sharply. Turkish lira holders watched gold increase several hundredfold over the past two decades as Turkey experienced repeated currency crises and annual inflation exceeding 80% in 2022 (OECD Economic Outlook; LBMA gold price data). Across generations, gold has preserved purchasing power in Indian rupees as well — one reason India has historically ranked among the world's largest gold-buying nations (World Gold Council, Gold Demand Trends).
The mechanism is universal. It works wherever a central bank can expand the money supply. That's everywhere.
Has gold ever completely failed as a store of value?
Gold has never been rendered intrinsically worthless — but government intervention has, in specific historical moments, forcibly stripped its purchasing power from citizens. The clearest example: US Executive Order 6102, signed by President Franklin D. Roosevelt on April 5, 1933 (US National Archives, Executive Order 6102). It required American citizens to deliver gold coins, bullion, and gold certificates to the Federal Reserve at the government's fixed price of $20.67 per ounce. Months later, the Gold Reserve Act of January 1934 revalued gold to $35 per ounce — a 69% increase that transferred that purchasing power directly to the federal government (Gold Reserve Act of 1934). Citizens who had held allocated physical gold and kept it preserved their wealth. Holders of paper gold claims did not.
The lesson isn't that gold fails. It's that the purchasing power of gold is contingent on physical possession. Allocated gold in your name, held in a jurisdiction with strong property rights, has never been rendered worthless the way paper currencies, bonds, or unallocated deposits have been. No government has ever printed physical gold into existence.
How does gold's purchasing power compare to real estate over 50 years?
On total return — including rental income and leverage — real estate has outperformed gold over most 50-year periods in major urban markets. But that comparison has two hidden inputs gold doesn't carry: leverage and income. Most real estate is purchased with mortgage debt, which amplifies both gains and losses. Strip out leverage and rental income, and the raw purchasing power of unencumbered real estate tracks inflation broadly over 50-year periods — not dramatically different from gold in pure purchasing power terms, though location creates enormous variance.
The deeper difference is structural. Real estate is illiquid, geographically fixed, maintenance-intensive, and subject to property taxes, rent controls, zoning restrictions, and in extreme cases, expropriation. Gold is globally liquid, divisible to any denomination, borderless, and costs only storage. For investors seeking pure purchasing power preservation outside the financial system — wealth that is portable, unencumbered, and requires no management — gold does something real estate structurally can't. In practice, most long-term investors use both: real estate for leveraged, income-generating appreciation; and gold specifically for clean, portable, outside-the-system wealth storage that real estate cannot replicate.
What Does Gold's Purchasing Power History Mean for Your Portfolio?
Physical gold's portfolio role is insurance against the specific risk fiat currencies carry: debasement. Understanding the purchasing power of gold as the core thesis — rather than treating gold as a price bet — changes the allocation decision entirely. Many portfolio practitioners suggest 5–15% in gold as a purchasing power anchor — not for growth, but to protect the purchasing power of everything else you've built.
The case for physical gold specifically comes down to counterparty risk. Gold ETFs and futures track the price — but they are financial instruments. They carry the risk that a fund manager, custodian, or exchange counterparty fails to deliver. Physical, allocated gold held in your name at an insured vault carries none of that. You own the metal outright. It cannot be rehypothecated, pledged as collateral without your knowledge, or zeroed by a counterparty failure.
The Savoy Gold Ratio works because someone held physical gold across 55 years. The purchasing power of gold was preserved because the metal itself was held — not a paper claim, not a fund unit, not a futures contract. A paper claim doesn't carry the same guarantee.
Holding gold because you understand the mechanism changes everything. The investor who grasps this doesn't flinch when gold falls $200 in a week. They know what they own: a claim on a fixed share of global wealth that no central bank can dilute.
One ounce of gold. Dinner for fourteen. A quality suit. A century of data confirms the purchasing power of gold holds while currencies fall. The same story, every time.
1. GoldSilver — Gold & Silver Price Charts (Current Spot Prices)
2. World Gold Council — Gold Demand Trends & Above-Ground Stock Data (end-2024)
3. World Gold Council — Central Bank Gold Reserves Survey 2025
4. Bureau of Labor Statistics — Consumer Price Index (CPI) Historical Data
5. US Treasury Fiscal Data — Debt to the Penny
6. Equitile Investments — Dr. George Cooper, "The Savoy Gold Ratio" (January 30, 2026)
7. Congressional Budget Office — Budget and Economic Outlook 2025–2035
8. Federal Reserve — H.4.1 Balance Sheet Statistical Release
9. Federal Reserve / FRED — M2 Money Supply
10. Federal Reserve History — The Great Recession and Its Aftermath
11. Silver Institute — World Silver Survey 2025
12. NYU Stern / Prof. Aswath Damodaran — Annual Returns on Stocks, T.Bonds and T.Bills: 1928–2024
13. Bank of England — Inflation Calculator
14. London Bullion Market Association — Historical Gold & Silver Price Data
15. US National Archives — Executive Order 6102 (April 5, 1933)
16. International Monetary Fund — World Economic Outlook April 2026
17. World Gold Council — Gold Returns Data
