Gold's Performance in the Face of Inflation Over the Past 50 Years
- ccancino3
- Mar 13
- 3 min read
Inflation has historically eroded the purchasing power of money. In this context, gold is considered the ultimate safe haven. Discover how not only has saving in gold offset the negative effects of inflation over the last 50 years, but it has also multiplied, in real terms, its purchasing power.
Inflation: Loss of Purchasing Power
Inflation is the sustained increase in the prices of goods and services over time, which reduces the purchasing power of money. Both the US dollar and the Mexican peso have experienced significant losses in value over the years, affecting savings and investment. Inflation and currency devaluation respond to multiple factors, both regional and global.
Inflation in the United States
Since 1975, the accumulated inflation in the United States is over 490%. One of the
most relevant milestones that triggered the inflationary phenomenon in the US was the decision of the US government in 1971 to abandon the gold standard, allowing the emission of dollars without physical support. This change accelerated global inflation, aggravated by events such as:
> 1973-1979: The oil crisis, caused massive increases in crude oil prices, raising inflation around the world.
> 1982: Excessive debt and difficulties in meeting financial commitments caused the debt crisis in Latin America.
> 2001: September 11 attacks caused instability in the global markets.
> 2008: Collapse of the banking system and massive bailouts that raised inflation.
> 2020-2022: Emission of large amounts of money and disruptions in the supply chain, as part of the COVID-19 pandemic.
> 2022-present: Wars in Ukraine and Gaza as well as trade tensions between the US and its main trading partners, caused an increase in the production and transportation costs.
Inflation in Mexico
In Mexico, inflation has been particularly severe, reaching almost 1,000% since 1975, due to multiple economic crises:
> 1976: Devaluation of the Mexican peso by 60%.
> 1982: New devaluation of the peso by 70%, as a result of the external debt crisis.
> 1987: Stock market crisis with impact on financial markets.
> 1994: Economic recession and crisis of the "Tequila Effect".
> 2008: Devaluation of the peso by 27% due to the global financial crisis.
The average annual inflation rate in Mexico for this period is 19.6%, equivalent to an accumulated inflation of approximately 980% in 50 years.
Gold: A Haven Against Inflation
In the last 50 years, the price of gold per ounce went from approximately US$140 in 1975 to more than US$2,900 in 2025, a growth of more than 1,900% against the US currency.
If in 1975 a person saved US $1,000 dollars in cash, today these dollars could buy the equivalent of just a sixth of what they bought in 1975. This depreciation is due to the loss of purchasing power of the dollar, which resulted from an accumulated inflation greater than 490%.
In contrast, if in 1975 that person had decided to save those same US $1,000 dollars in gold, they would have received 7.14 ounces, whose current value, 50 years later, exceeds US $$20,700, a growth of 1,900%, far exceeding the accumulated inflation of the period. The above implies that the saver in question would not only have preserved the purchasing power of their money, but would have almost quadrupled its purchasing power in real terms.
As demonstrated, the data implies that gold is one of the most profitable and safest long-term investment strategies. As the world faces new economic challenges, the importance of gold as an investment asset is undeniable.
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