[AnimalMuppet]

> the fact that gold price changed from $1700 to $1050 to $1200 says nothing about value of gold - instead it says everything about the value of dollar.

No. The value of the dollar did not change to that degree in the past five years. The only way you can define that as being changes in the value of the dollar is to define the value of the dollar in terms of gold. Then you're correct, by definition, but your argument is circular.

Your example over the last 100 years may be valid. For the last five years (or even 40), though, the change in the value of gold has been a reflection of peoples' fears about paper currency, rather than an actual measure of the value of that currency.

[mamon]

The point is that, unlike gold, dollar (or any fiat currency for that matter) has no intrinsic value, only the value we give it in our minds as average of our greed and fear.

Exercise for the reader: take a look at this plot [1] and this plot [2] and guess which year US government stopped using gold standard for dollar.

[1] http://stooq.pl/q/?s=xauusd&c=100y&t=l&a=lg&b=0

[2] http://static4.businessinsider.com/image/50e77df8ecad049b560...

[AnimalMuppet]

Define "intrinsic".

Gold doesn't have intrinsic value either, except for it's industrial value. Gold's value as a currency is also "only the value we give it in our minds as average of our greed and fear."

[JoeAltmaier]

Be fair; that Consumer Price Index rise also corresponds to the beginning of consumerism. Lots more changed than just a currency basis. That was probably the least important?