Inflation Calculator

The Bank Of Canada Inflation Calculator is a very useful tool in comparing prices from the 1980's to the present day.

For instance, a $500 price in 1987 will give you a price of $877 today.

So if you are willing to discount the exchange rate between the Canadian and U.S. dollars for the moment, the calculated high for gold, if it were to compare with the previous high of $850/oz. would be briefly $2373/oz today.

So if the gold price were to re-test the highs of 1980, then it would have to reach this amount. A gold mining company would theoretically give you the benefit of the average price, either in equity returns, or in paying out dividends.

Inflation calculations are not considered to be theoretical, but are called real terms.

http://www.bankofcanada.ca/en/rates/inflation_calc.html

You can compare the numbers with Tom's inflation calculator here:

http://www.halfhill.com/inflation.html

As there's no benchmark for the source of inflationary statistics, these numbers differ quite substantially. Inflation rates would have been different in the U.S. and Canada as well.

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