CPI and Real CPI Adjusted Charts
Inflation (a growing currency supply leading to rising prices) is the hidden tax. It is vital to use inflation adjusted charts when looking at historical prices to avoid misinterpretation.
Strictly, what matters is the rate of growth of the money supply versus the real productive growth of the economy. If the money supply growth outstrips the real productive growth rate, then prices will tend to rise. In other words the purchasing power of the currency will decline.
The fiat currencies are not a fixed metric against which other things should be measured. A the very least the changing purchasing power should be included in any longer-term charts.
Why everyone should hold some gold & silver
It used to be 'common sense' for investors to hold 5 to 10% of their liquid portfolio in gold and silver, just in case something catastrophic occurred. It was insurance. That 'common sense' has been lost by most people, and so very few people hold and gold or silver. It's as if most of population has forgotten what house insurance is for, and are now uninsured.
But, 'common sense' is returning, due to the recent financial events. And with that return is the inevitable extra demand for gold & silver, and with the very limited supply, the inevitable rise in price.
In my opinion the case for holding at least 10% of your liquid portfolio in gold and silver is very strong.
I think you should apply the "don't put all your eggs in one basket" rule.
Here are two options for at least some of your gold and silver holdings that I think are excellent.
Places to buy and store gold and silver
These two firms offer very reasonable charges on buying and selling real physical allocated gold and silver. That is VERY important. With these companies you are buying the real physical metal, not a paper promise.
They also store your gold/silver for you at very low costs.
They are the best options I have found.
With Bullion Vault you also get a free gram of gold, so you can register and try out the system completely without charge.
Personally I consider selling gold or silver at the moment quite inappropriate. But, it is a reasonable idea to swap some gold for silver at what you consider to be dips, and to swap some silver for gold at what you consider to be peaks. That way you maintain your ownership of real money while trying to benefit a little from the volatility of the long-term bull market.
Even if you are not sure about buying gold and silver, I think it is a very good idea to open an account with both of these companies. It won't cost you anything but a little time, and if you do decide that owning some gold and silver is a sensible precaution, then you can do so very quickly.
My CPI Adjusted Charts
What follows are many of my CPI adjusted charts for gold & silver, and other sectors. I hope you find them useful.
US Consumer Price Index (CPI)
A linear plot. You can see how the CPI stays relatively constant from 1774 till the creation of the Federal Reserve in 1913. Then prices started to climb. The methodology for calculating the CPI was changed in 1983, and the result diverged from what the result would have been if they had continued with the old methodology.
A log plot. You can see the zero net price change from 1774 to 1913. Then prices started to climb.
The conventional way of inflation adjusting, where prices are adjusted in terms of the purchasing power of today's currency. The gold line is actual GoldUS$ prices. The purple line prices adjusted using the official CPI numbers for the US. The green line prices adjusted using the Real CPI numbers.
ShadowStats CPI Adjusted Gold and Silver Charts from 1720
Two great charts, one for gold and one for silver.
A less conventional chart, adjusted in terms of the purchasing power of 1980 currency. View it as if you were living in 1980 and you had knowledge of future prices and inflation.
Gold Adjusted by Money Supply Inflation
True inflation is the growth in the amount of money (as opposed to price rises). There are various money supply measures. This wonderful chart shows the price of gold adjusted using a variety of those measures.
With thanks to http://en.wikipedia.org/wiki/User:Emilfaro who created it here: http://commons.wikimedia.org/wiki/File:Gold_Inflation_Adjusted.png
US Real CPI Adjusted House Prices
New Zealand Real CPI Adjusted House Prices
Real CPI Adjusted S&P500 from 1871