A philosophical question on value

[A10]

I've long said that the value of goods hasn't changed, they just seem to cost more because the value of a dollar has diminished. I've used the example of how in the 1870's you could buy a shiney new Colt for a 20 dollar gold piece and, for the longest time, that held true. Nowadays though, a 20 dollar gold piece these days will get you 3 of the new Pythons.

So what changed? Has the true value of gold increased? Or has the true value of a Colt decreased?

Feel free to share pictures of any random Colts or gold pieces you may have!

 

[Onomea]

I think it has to do with demand in specific environments. E.g., the value of a glass of cold water when trekking in the Sahara desert, or a down coat in a snow storm in Antartica.

Here's a thought: Would a $20 1870 gold piece and a Colt from 1870, assuming similar condition, be of near conquerable market value today? I think probably so...

 

[taz666]

Probably took a month worth of work to earn that $20 double eagle back then.

 

[grover99]

Probably took a month worth of work to earn that $20 double eagle back then.

I read a lot of westerns and the regular ranch hand was paid $30 to $35 a month plus chow around 1875 or so.

 

[ISCS Yoda]

In reality, you cannot buy much with a $20 gold piece because nobody would know what to do with it.

they just seem to cost more because the value of a dollar has diminished.

That's pretty much the short definition for inflation.............

 

[sjmjax]

I'm the product of three generations in manufacturing.

We've seen the "cost" of production falling continuously over time.
Costs meaning the hours of human labor, the amount of raw material needed, the energy required to produce the end product.

Improved methods, better machines, and efficiency has significantly reduced these direct costs.

What has increased is taxes, insurance and regulatory compliance. But most importantly, our "money" simply isn't as valuable as it once was.

 

[M29since14]

I agree with Onomea. Gun buying by itself is basically a bit irrational for most of us. But we keep buying them. I can sort of justify owning four guns, maybe five. Beyond that, it gets just a bit mindless, financially, for me. Like I'd guess quite a few of us here, I can't afford and really am not too interested in truly "investment quality" firearms. (Viz., six-figure sporting rifles and shotguns.) So there goes that angle.

Trying to relate gun prices and purchases to ordinary commodities that we all commonly need and use regularly, and purchase with dollars, is a difficult stretch.

 

[KSDrifter]

It's not philosophical or even mysterious. Like in the least. It's called inflation. Except for when more people now want the same thing, then it's called people chasing scarce resources.

Take ammo for example. When we had the shortage, all of a sudden everyone started buying up all the ammo. There wasn't enough. That's people chasing scarce resources. Ultimately prices skyrocketed as people started to value the ammo more than before, and we got gouged. Then when ammo became plentiful again, the prices stayed the same because now we were being robbed. Ultimately raw materials and inflation will catch up to the real cost and knowing us, we'll get screwed by starting the cycle again lol.

 

[A10]

It's not philosophical or even mysterious. Like in the least. It's called inflation. Except for when more people now want the same thing, then it's called people chasing scarce resources.

Take ammo for example. When we had the shortage, all of a sudden everyone started buying up all the ammo. There wasn't enough. That's people chasing scarce resources. Ultimately prices skyrocketed as people started to value the ammo more than before, and we got gouged. Then when ammo became plentiful again, the prices stayed the same because now we were being robbed. Ultimately raw materials and inflation will catch up to the real cost and knowing us, we'll get screwed by starting the cycle again lol.

Ah, but the analogy held true from around the 1870's up through maybe the early 2000s. So it's not purely inflation. The cost of gold was on a steady increase, as was the cost of a new Colt. Maybe Colt screwed things up when they stopped manufacturing handguns for a while? Or just the gold market has gone entirely off the rails!

 

[45Smashemflat]

Or maybe Colt is accepting less margin per gun, and making their money on more volume? Sometimes you have to work your pricing with your competition in mind.

 

[KSDrifter]

Ah, but the analogy held true from around the 1870's up through maybe the early 2000s. So it's not purely inflation. The cost of gold was on a steady increase, as was the cost of a new Colt. Maybe Colt screwed things up when they stopped manufacturing handguns for a while? Or just the gold market has gone entirely off the rails!

Gold has absolutely gone off the rails!

 

[pharmer]

When I was young everything had great value and I could access none of it.
Mid way through life, some things had value and I could access the ones I wanted.
As an old man, no THINGS have value and I am happy to see others chase after those things.
Precious metals are precious to whom?
My worst investment ever.

Joe

 

[A10]

When I was young everything had great value and I could access none of it.
Mid way through life, some things had value and I could access the ones I wanted.
As an old man, no THINGS have value and I am happy to see others chase after those things.
Precious metals are precious to whom?
My worst investment ever.

Joe

I dunno...42 an ounce today.

 

[pharmer]

I dunno...42 an ounce today.

The $760 I paid for the silver would have bought 58 shares of Disney in 1981. With the splits that would be 2784 shares at $115 today or $320,000 vs $4,200. Yep, worst investment ever (Not counting $$$$ for stripper's kid's braces around the same time frame). Joe

 

[greenwellg]

If you bought the right Colt with that $20 gold piece and put it in a bucket of Rockefeller's oil, it could be worth a million or more today. While it will be long lost 40 years from now, the real question is what to buy today?
Land.
Bought the lot for $59k, built a house on it that cost $100k not including my labor and sold it 3.5 years later for $329900 in my pocket, not a penny went to taxes. Lived in it while it appreciated $500 a week.
No rent saved me a bundle.
1600 hours labor without compensation until it was sold, then $100 an hour tax free.
Took that and used the equity to build another house. Sadly the wife decided she did not want to move to another house for 18 years. Sold that house for $406,176 in my pocket no gov't grabbing my money.
That sits in the credit union at 4% and we lived there for "free". Still married but she gets $50k a year in retirement and I get much less than half that.
When she dies her retirement dies with her, mine is still there.
I like her position better.

 

[greenwellg]

What to do today regardless of employment opportunities.
Buy a cheap run down house, pay it off living like a pauper.
Buy run down cars then repair-restore them for cheap transportation.
Basically the same thing we did starting 25 years ago.
Of course starting at 75 is a loosing proposition.

Edit:
Pick the right woman to marry or you lose it all.

 

[Riposte1]

I think it has to do with demand in specific environments. E.g., the value of a glass of cold water when trekking in the Sahara desert, or a down coat in a snow storm in Antartica.

Here's a thought: Would a $20 1870 gold piece and a Colt from 1870, assuming similar condition, be of near conquerable market value today? I think probably so...

An 1873 Colt SAA could easily bring $10,000 today at auction - a doggy one $2500. I've seen them bring well over $100K depending on provenance... 25 years ago Frank Hamer's "Old Lucky" brought $165,000 before the premium and tax.

I don't keep up with the price of gold but I'd say the typical handgun today is likely not as high as a $20 gold coin of about an ounce.

Riposte

 

[greenwellg]

Us coins are generally 75% of their actual value in material. Sadly inflation has made them grow higher than their value.
In the Weimar Republic of post WW1 Germany inflation went crazy due to money with no intrinsic value. It got to 1000% a week!!
The solution was going BACK to intrinsic value in coinage but the damage was done and soon after that the process of self immolation began.
A pre 1982 penny is worth 3 times it's face value in copper, then they made it worthless plated zinc. Now it costs more to make a worthless penny that is is worth.

 

[glenwolde]

A good bit of both. Increased manufacturing efficiencies (and larger markets) have brought down the price of many goods. The price of gold was artificially controlled for much of the period you mentioned. Currently every single large central bank has increased their gold reserves for a variety of geopolitical reasons, and seem to be continuing to do so. That will stop at some point, but I don't see it reversing any time soon. It appears to be a somewhat permanent reallocation.

I'd argue that the price of gold is the most constant. There are times like now when demand rises and it inflates against all major currencies. I do not view gold/silver as a good investment. It is however an excellent hedge. A reasonably small allocation (5-10%) will come in handy at times. But it will just sit there most of the time. Mining companies might be a good option for a portion of that. But again as a hedge.

Witness Home stake Mining vs The Dow during the depression.

 

[pharmer]

...............................Edit:
Pick the right woman to marry or you lose it all.

Well, losing half twice, winds you up in the same place. Even after the "the slings and arrows of outrageous fortune", life is a grand adventure. Don't spend it chasing "stuff." Joe

 

[Onomea]

An 1873 Colt SAA could easily bring $10,000 today at auction - a doggy one $2500. I've seen them bring well over $100K depending on provenance... 25 years ago Frank Hamer's "Old Lucky" brought $165,000 before the premium and tax.

I don't keep up with the price of gold but I'd say the typical handgun today is likely not as high as a $20 gold coin of about an ounce.

Riposte

But, keep in mind the $20 gold piece is an 1870 issued coin. One in mint condition in today's coin collector market, per a quick internet search yesterday, could bring as much as $37,000.

 

[Riposte1]

But, keep in mind the $20 gold piece is an 1870 issued coin. One in mint condition in today's coin collector market, per a quick internet search yesterday, could bring as much as $37,000.

Actually I looked that up and found several for $3700 - 3900 (but I'm not buying ) - that said I'm sure there are some coins that are rare and would bring much more.

I watch a lot of auctions for guns but some of them carry collector coins as well.

Riposte