Gold Isn't Going Up, Your Money Is Just Losing Value

Since 2007, major currencies have lost roughly 85% of their purchasing power relative to gold.

Whenever gold rises and I get excited as a gold investor, I’m often met with the familiar refrain: “Gold isn’t really going up, the dollar is just losing value.” I used to brush that off as a cliché or a game of semantics, and honestly, it annoyed me. But over time I decided to dig deeper. I started analyzing the data visually, which is my favorite way to learn, and that’s when it finally clicked. They were right. Gold wasn’t truly soaring; fiat currencies were quietly eroding. Since then I’ve made it a mission to help others see this clearly too, using compelling charts that drive the point home. That’s exactly what I’m going to show you today.

Let’s begin with a clear visual. The chart below shows gold’s performance since 2007 across several major world currencies: the U.S. dollar, euro, British pound, Swiss franc, Canadian dollar, Japanese yen, and Australian dollar. While this isn’t an exhaustive list of global currencies, it offers a solid and representative sample to support the points I’ll be making throughout this piece. As the chart reveals, gold has surged by around 450% in most of these currencies, with gains ranging from a low of 270% in Swiss francs to a staggering 748% in British pounds.

Next, I’ll present the same data from a different perspective. This time, I’ll highlight the purchasing power of each currency relative to gold, or in other words, how much physical gold each currency could buy over time.

Since 2007, the major world currencies featured in this report have lost approximately 85% of their purchasing power when measured against gold. On the low end, the Swiss franc has declined by about 73%, while the British pound has suffered the most, with an 88% loss.

This chart offers compelling visual evidence of a critical truth: it’s less about gold rising in value and more about fiat and paper currencies losing purchasing power at an alarming rate.

So why are we using gold as the yardstick? Because it’s the most reliable monetary yardstick in history. For over 6,000 years, gold has served humanity as the premier form of money and store of value. While it temporarily fell out of favor starting in the 1970s, it is now making a powerful comeback as the world begins to recognize the deep flaws in our fiat money and monetary system.

These flaws have led to rampant inflation and growing financial instability. That is why people around the globe are turning back to gold in increasing numbers, helping drive its price to more than double over the past five years. In my view, this move is still in its early stages.

If you’re skeptical about using gold as a yardstick for measuring currency purchasing power, rest assured that its decline is confirmed by other metrics as well. The most widely used is the Consumer Price Index (CPI), which tracks the average change in prices over time for a fixed basket of goods and services.

I calculated the average CPI for the major world currencies referenced throughout this report and found that, on average, they’ve lost 33% of their purchasing power since 2007. The resulting chart closely mirrors the gold-based purchasing power chart shown earlier, with the steepest declines occurring during two key periods: 2007 to 2012 and 2020 to 2024. Both of these were periods of heavy monetary expansion during recessions or crises.

Now, I realize there’s a noticeable discrepancy between the roughly 85% loss of purchasing power when measured in gold and the 33% loss indicated by official CPI data. My working theory is that this gap exists because CPI figures rely on government-reported statistics, and governments have a well-documented tendency to understate inflation in order to make their currencies and economies appear stronger than they actually are.

Most people have noticed that the price increases they experience in the real world don’t line up with the tame inflation numbers coming from economists in ivory towers. Personally, I trust what gold is telling us, and it is saying that official inflation metrics are understating reality. When it comes down to it, I’ll err on the side of gold.

Another likely explanation that can coexist with the previous theory is that savvy players such as central banks and hedge funds, who have superior access to information and a far deeper understanding of the global macroeconomic, fiscal, and monetary situation, have dominated gold buying and have been the main drivers of the gold bull market in recent years, with relatively little participation from retail investors.

Their actions indicate that gold’s surge is not random but is likely anticipating much higher future inflation as a byproduct of today’s excessive global debt levels. That debt burden will almost certainly require aggressive debasement of fiat currencies in the coming years. In this scenario, the inflation reflected in the price of gold is likely leading the official inflation that eventually appears in consumer price indexes.

Now let’s examine why currencies steadily lose purchasing power over time: inflation, or the persistent rise in the cost of living. It’s important to understand that inflation isn’t fundamentally caused by wars, tariffs, supply shocks, strikes, droughts, or energy crises. These factors may contribute to short-term price spikes, but they are not the underlying driver.

At its core, inflation results from the debasement of currency. In other words, it is the dilution of a currency’s value through creation of new money. As Nobel Prize–winning economist Milton Friedman famously said, “Inflation is always and everywhere a monetary phenomenon.”

As the chart below illustrates, the global M2 money supply, one of the most widely used measures of total currency in circulation, has surged by 205% since 2007, rising from $38 trillion to a staggering $115 trillion. This massive expansion of the money supply is the driving force behind the soaring cost of living worldwide and a key reason why the price of gold has surged in every major currency across the globe.

The next chart demonstrates how gold’s price closely tracks the growth of the global M2 money supply over time. This is the primary reason why gold remains the most effective store of value and hedge against inflation.

Although nearly everyone alive today has lived their entire lives in a world of persistent inflation, it’s important to understand that this condition is not an inevitable feature of life or capitalism. Instead, it’s a direct consequence of fiat money or paper currencies that are not backed by gold or silver as they were prior to 1971.

Once the world abandoned the gold standard, which was the practice of backing currency with gold, governments and central banks gained the power to expand the money supply without restraint. And that’s exactly what they did. The result was a relentless rise in the cost of living.

If you’re interested in exploring this topic further, including some fascinating long-term data showing how the U.S. dollar has lost 97% of its purchasing power since 1913, be sure to check out this report I wrote.

Another key point to highlight is this: as long as the world remains on a fiat money regime, inflation isn’t going away, and gold will continue to rise. That’s because fiat currencies all suffer from the same terminal flaw. Over time, they devalue, deteriorate, and eventually die. History shows that no fiat currency has ever escaped this fate, and neither will the dollar, the euro, or the yen. It’s not a question of if they fail, but when.

One of the most alarming forces sealing the fate of the world’s fiat currencies is the explosive growth of global debt, which has surged tenfold since the mid 1990s, reaching an estimated $250 trillion. This towering debt burden is the ticking time bomb that will ultimately bring fiat currencies to their knees.

As debt levels spiral out of control, they begin to choke economic growth and destabilize entire financial systems. Eventually, governments and central banks are left with little choice but to fire up the printing presses to service that debt and pay their bills. The result? A tsunami of rapidly devaluing paper money and a skyrocketing cost of living, which is the classic setup for hyperinflation.

The chart below illustrates how, during Weimar Germany’s infamous hyperinflation of the early 1920s, physical gold such as a single gold Mark coin not only preserved its value but also skyrocketed when priced in the rapidly devaluing paper Marks of the time. This happened because the Reichsbank, Germany’s central bank, was running the printing presses at full throttle to prop up a collapsing economy and cover massive government deficits.

That chart is a historical preview of what will unfold in the years ahead, when gold hits $4,000, $5,000, $7,000, $15,000, even $20,000 per ounce, and ultimately some mind-boggling figure like $20 quadrillion when the dollar and other major fiat currencies are on the brink of worthlessness. That inevitability is one of the main reasons I keep urging people to stop worrying about short-term corrections in the price of gold (learn more).

Source: Wikimedia Commons

To conclude, I hope I’ve made it clear that when gold soars in price across global currencies, it is less about gold genuinely gaining value and more about paper currencies rapidly losing theirs. As a passionate advocate for gold and an investor who avoids mainstream assets like stocks (aside from miners), bonds, and real estate in these times, I can’t deny feeling a surge of excitement when I see gold’s price and the nominal value of my portfolio rising sharply, as it has over the past couple years.

But that excitement is tempered by a sobering reality, which is that gold is soaring because fiat currencies, including the U.S. dollar, are taking yet another hit to their purchasing power. Still, I’d much rather be watching that unfold from the safety of owning gold than from the sidelines without it.

If you’ve enjoyed this report or have any questions, comments, or thoughts, please give this post a like and share your thoughts in the comments below—I’d love to start a conversation and hear your perspective.

---

Disclaimer: the information provided in The Bubble Bubble Report and related content is for informational and educational purposes only and should not be construed as investment, financial, or trading advice. Nothing in this publication constitutes a recommendation, solicitation, or offer to buy or sell any securities, commodities, or financial instruments.

All investments carry risk, and past performance is not indicative of future results. Readers should conduct their own research and consult with a qualified financial advisor before making any investment decisions. The author and publisher disclaim any liability for financial losses or damages incurred as a result of reliance on the information provided.