Setting the definition of the terms used in the title as a foundation, is a commonly applied method in research. The chicken and egg conundrum being at full play, if the title is being derived from the review or the review is the product of the framework set in the title. The 100 Year Marathon is a review of Gold, the metal, its price, the very powerful role it plays in the ecosystem that is understood as the overall economic market and in particular how it is facing up to the task of protecting ones purchasing power. The title refers to a view that is taken on Gold over a century, the marathon in this instance is the relentless destruction of purchasing power of everyone’s pocket money.

The marathon as one of the foundational Olympic disciplines, going back 2500 Years, is majorly a challenge of endurance, holding the steady pace over the long-haul, some 42 Km. Not something you wouldn’t know already. The inflationary effect of governmental currency policies are as relentless in pursuit, going over a very stretched period of time and the finish line being at a vague distance, just as one would find in a Marathon. Gold on the other hand is THE ultimate long distance contender in the Olympics of finance. Reference could be made here to the Millions of years it takes the universe to create the mineralization or that it has been used by Humans for 5000+ Years as a medium of exchange. Focus in this particular review is the relation of Gold in its alleged role to counter the decline of purchasing power in Governmental FIAT Currencies. The relentless marathon of currency dilution vs Gold going on for decades with no end in sight.

To quickly recap currency dilution, as in loss of purchasing power and how it is constantly working against everyone’s hard earned savings.

For ease of explanation the loss of purchasing power in the outlined marathon is called “The Inflation Runner”. He has different gears and torquing, very dependent on the current state of financial markets and money policies, sometimes running at a higher pace and sometimes slowing down. The important thing to note is that anyone trying to get ahead has to surpass the Inflation Runner first just to make a step into positive territory.

In any given moment the Inflation Runner is setting the pace as a denominator that has to be overcome to even move one step ahead. Another example would be a treadmill that is having a set pace and the goal is to outrun the treadmill. Conversely, if no effort is made to run against it, just standing still, one is being pushed back.

This can also be described in a linear mathematical term. In a given time-frame, the constant variable is always lets say -2, as The Inflation Runner. If you want to stay even, you will have to make +2, just to stay on par, as in 0. The steady headwind, The Inflation Runner, is always decreasing your progress by the pace he is setting. Compounded, adding to the decrease each year. If one does no fight it, outrun this benchmark, he is constantly loosing ground. Not even staying equal. Let alone getting ahead, which is only achieved by any value higher than the pace the Inflation Runner denominates .

The most common scenario for private households is not having a counter-play, standing still and hence being pushed back. The harsh compounding effect, year over year, of loss of purchasing power is seen and felt mostly in a longer term perspective. The boiling frog syndrom being a very applicable metaphor. Researchers found that a frog that is suddenly put into hot water, he gets out quickly, fully reflexes to impending death. On the opposite, if the frog is exposed to only mildly warm water, followed by small incremental increases in temperature, no reflexes, not even knocking against the pot, certain, inescapable death for the frog.

Moral of the story: When our living conditions deteriorate gradually, we adapt to these conditions instead of getting rid of them, until we are no longer strong enough to escape.

This being the most common scenario with savings of private households, no effort or counter-play is taking place, while the inflation runner is always on duty.

Background

When Einstein concluded the Equivalence Principle in 1907 he probably was not exactly pondering the idea of Gold and its relation to the financial ecosystem. I am absolutely certain young Albert, being on top of his game, would have found something truly remarkable on that end also. Whilst it is worth trying to re-purpose one of his most foundational theories in physics for understanding the question at hand.

Einsteins theory describes that resting in gravity feels the same as accelerating in space!

To rewind this description, in his finding gravity is indistinguishable from acceleration. To give a very quick recap of this conceptual idea. Figure 2 above is showing a person in a box throwing a ball forward. It goes to the ground of the box. The physical effect at play, as to why the ball is going to the ground will be already moving into the second part of the explanation of his theory.

What young Albert was pondering for some years, if there would be any difference that can be proven in the two following cases, shown in Figure 4 below:

Person in a Box feels the force of gravity, like on earth
Person in a Box is accelerating in space and feels as if experiencing gravity

What is known in physics as the principle of equivalence is Einsteins conclusion that the effect of the two situations are equal. Gravity is equivalent to acceleration.

To set at least one quote in this review, "There is no experiment that will discern the difference between the effect of gravity and the effect of acceleration."
Albert Einstein

To apply this theory into simple terms for the sake of describing Golds relation to monetary devaluation. You will feel the burn in your wallet, indistinguishable and fully equal to one another, in case:

Gold is accelerating, and you are not part of the acceleration
[Effect of Acceleration = a]
Your currency is declining vs Gold
[Effect of Gravity = g]

Both are indistinguishable in their effect. Since both can be understood as the same, protecting ones wealth by converting and holding gold, is avoiding a gravitational pull of the FIAT currency and also being part of an acceleration.

Reversely, as the inverse description of the same concept. Being in FIAT currency is attributed with a gravitational force of declining purchasing power, whilst also not taking part in Golds acceleration. Thats the marathon with no finishing line in sight, at all!

There are some key assumptions to be made here:

Golds value is measured in a FIAT Currencies, can be any of them globally
FIAT currencies are continuously losing purchasing power, with perhaps a deflationary episode in between
The loss in purchasing power is inversely correlated with the Gold price, meaning the gravitational pull of currency inflation is the acceleration of Gold

A 100 Years can be referred to as the potential lifespan of the homo-sapiens, being very ambitious here. This time-frame will be used as a reference, starting in 1950, +100 Years, ending in 2050. At time of writing closely inching to exactly 3/4 of this time-frame. First is a backwards perspective going back -75 Years, the after the fact perspective, then looking out to the future for the next 25 years, as visualized in Figure 1.

The century being a very applicable term in this instance, as an investor and people as a whole, have to decide for themselves why they would want to make the right decisions in creating wealth in the first place. Digressing here to a WHY? Question. To explain, unless supported by a heartbeat of an investor any financial decision is by default less of significance. I can refer to one of the most life changing books that can be read in regards to longevity, Peter Attia`s book "Outlive", for two reason:

The book focuses on longevity tools to live 100 Years, hereby correlating to the "Why" in making sound investment decisions.
In Autumn and Winter of 100 Years, the book describes "marginal decades" that can be prepared for by making the right decisions for health.

One key theme of the book is the idea of "Medicine 3.0," which Attia describes as a more comprehensive and individualized approach to health that leverages technology, advanced diagnostics, and a deeper understanding of human physiology. This approach contrasts with traditional healthcare, which often focuses on treating diseases after they have manifested rather than preventing them.

Staying healthy, in essence, requires making decisions looking out to the future very strategically, not getting lost in daily tactics and habits, same applies for wealth

Without further digression, Figure 2 is reflecting the almighty Gold Chart going back 75 Years. After the fact perspective. Price of an ounce Gold measured in USD. There is a clear observation to be made, the price was more or less flat until the 70s. It was pegged to the fixed amount of 35$ / Ounce for converting USD to Gold. The USD was established as Gold backed currency, a proxy for Gold as monetary means of exchange. In 1971, president Nixon and his administration made the decision to end the fixed conversion rate and thereby marking the end of the USD as a Gold backed currency. The USD transitioned to being part of a fiat currency system. Leaving one Gold backed currency in place, which is represented only the metal itself.

Since then, starting from the 35$ Mark / Ounce of Gold, the price has moved up roughly 8000%, moving higher as we speak. To grasp this idea, having bought Gold for 500,- USD in 1970 at 35$, would now be worth ~40.000,- USD. That’s a bad-ass return.

To establish full understanding for the coming propositions, to asses the real value, as in purchasing power, Gold has to be adjusted for inflation. A test and pondering, any other investment needs to hold up against also. As every runner in the marathon is trying to outpace the decline in purchasing power in FIAT Currencies. Figure 3 is reflecting the inflation adjusted Gold chart. Less steep in ascend, and showing longer-term periods in which Gold is declining in purchasing power, meaning you can buy less with the same amount of Gold. Or to rephrase, the USD that Gold is measured in, is holding stronger vs its competitor Gold in the marathon to protect purchasing power. It is, for that time period, getting ahead in the race and Gold falling behind. An example is the 80´s to 2000 period shown in the downward facing arrow below.

To quickly recap:

To measure true value of Gold in USD it has to be adjusted for Inflation, and allow for comparison over the years
In real terms, adjusted, Gold can get ahead of purchasing power depreciation or it is losing ground and getting behind vs US Dollar in fighting inflation.
Gold has kept and/or regained the Purchasing Power from its previous tops
At best, periods in which Gold is losing ground in the marathon are avoided, holding Gold
Gold seems to re-accelerate at present moving into the marginal decades, +25 Years, looking forward
Declining stages, are related to high interest, leading to a strengthening of the U.S. dollar. A strong dollar reduces the price of gold in terms of other currencies, making it more expensive for non-U.S. investors and lowering global demand.

For the remaining periods, in which Gold is winning the marathon. A key question for the logical proposition in this review is; is Gold accelerating as much in price, or is monetary value declining?

Figure 5 showing the inflation adjusted Dollar index, DXY / CPI, over the last 75 years

The inverse curve of Figure 5 is overlayed with the inflation adjusted Gold price in Figure 6, reflecting a very strong correlation

The thought experiment, repurposed from OG-Albert, shown in Figure 7, has to be seen with a grain of salt in its application for the Gold price.

In the sense that the financial ecosystem has different layers and variables than inertial mass and gravitional mass. Gold can be measured in various currencies, with an arbitrage to one another, also geo-political tension influences the Gold price, let alone seasonality and manipulation by magnate banks. What is to be noted further, a very close and positive correlation is given between purchasing power and Gold, as described here by grativation and acceleration,

while also in physics only the effects are the same, the coneptual ideas are different. Meaning they are two layers that usually work opposite to one another, but can move independently. This being said

Comparison notes to other notable investments
SPX

House Prices

Silver

Performance / Quantitative analysis

3 Currencys as reference points
EUR
Swiss France
Turkish Lira
In this particular case the major role

M2 Money Supply

o CRE Capital Rotation Event

Effects in the next 5 Year

Marginal Decades

Final Conclusion

Since 1971 with the end of the Gold Peg, the only Gold backed currency left in the field is the metal itself
Gold is measured in FIAT Currencies, governmentally controlled paper money
The decline in purchasing power of FIAT currencies is inversely correlated with Golds ascend
Gold being the ultimate long distance contender in protecting ones purchasing power
In the long-haul, by default, in real terms, one is either part of an acceleration of Gold or a gravitational pull of currencies
The effect of the two is indistinguishable from one another
Given this backdrop predicting the Gold price is inversely trying to answer the question if purchasing power declines and by how much.
The marathon of purchasing power devaluation has been on for 100 Years with no end in sight
/Conclusions for the next 5 Years
/Marginal decades to be reviewed in depth in the next Review