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Marijuana Cost VS. GOLD

J

jipedestran

Every morning I watch CNBC.

Five years ago, Gold was trading at 450 oz (approx). This was on par with high quality marijuana.

Ten to fifteen years ago, I remember gold to trade way below that number. An ounce of good kind bud still cost 400-500.....way way more than Gold.

Gold is now 1000 oz almost.....high quality marijuana closer to 400-450 zip.....

What is going on here?

Any real economists please chime in.

I have many of my own theories, but not time to post them now.

peace
jip
 
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P

pow monster

Member
Yes yes i have heard this before. marijuana was equal to the cost of Gold in weight at one time. Marijuana is generly expensive (although in canada I do not pay over 200 ounce) but it can go as high as 400-450 a ounce in other area's.....I believe this statement is more than
5 years old and gold was cheaper......this statment also has been used in reference to hash. anyways have heard gold to weed ratio's before.
 
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S

socioecologist

Cannabis and Inflation

Cannabis and Inflation

Buyers of cannabis are experiencing the positive side of inflation right now. Let's use an example everyone can drool over--an ounce of Chemdawg bought in 1991 for $500 (see the definitive Chemdawg 101 thread by High&Lonesome). To hedge against inflation, a grower would need to increase the price per ounce as shown below:



Alternatively, if the grower kept the price at $500 an ounce from 1991 through 2008, the actual value (in 1991 dollars) would be as follows:



The big question is: what is the price elasticity of cannabis? In other words, how much can you increase the price per ounce before people stop buying it. The most important thing to consider when asking this question is that the vast majority (roughly 75%) of American households have experienced wage stagnation for the last 35 years--there isn't excess disposable income to cover any cost increases in cannabis (increases above and beyond inflation). I think it is safe to say that cannabis prices--when controlled for inflation--have actually decreased over time, while production costs have increased.

One last graph--let's assume you maintain that $500 / oz. price from 1991 though 2008. Take a look at the price trend taking place concurrently in the gold market (with normalized gold prices to 1991 price levels):

 
S

socioecologist

Tanking Dollar

Tanking Dollar

Yep--world currencies that aren't pegged to the dollar and countries that hold low levels of US dollars in reserve are doing well. Check out the value of the Euro against the USD between January 2002 and November 2007 (low resolution, sorry):


If anyone doubts that the tanking dollar is not one of the primary causes of the increase in oil prices recently, check this out (price per barrel of oil in Euros, January 2002-November 2007)--for the numbers geeks out there, fluctuations in the US dollar is responsible for about 66% of the price changes:
 
G

Guest

Haha...cool thread. Adjusted for inflation the value of cannabis has decreased steadily over the years. Supply and demand dictate pricing. More people equals more demand...in general but obviously supply has been increasing cause there's no ability by sellers to increase prices.
 
Grizz

Grizz

Active member
Veteran
Its simple ,supply and demand, If there wasent so many of us growing the supply would be lower and the price would be higher. I don't know if it would be as high as gold but it would deffinatly climb.
 
G

Guest

I don't know if it would be as high as gold but it would deffinatly climb.
Click to expand...
Canna prices have not kept up with inflation...and that's a good thing cause I've always thought the stuff was just too damn expensive.
 
Grizz

Grizz

Active member
Veteran
Nondual said:
Canna prices have not kept up with inflation...and that's a good thing cause I've always thought the stuff was just too damn expensive.
Click to expand...
you must not be a grower. elect bills high cost of lights and nutes and soil, coco or whatever you grow in, add it all up and its not that profitable unless your really growing a lot.
 
G

Guest

Its called INFLATION. Stupid Government spends so muchhhhh money before they have it( its called credit). Then the Federal Reserve bails them out by printing more money which causes INFLATION. Which means the value of the dollar goes down and prices go up . We are living in a INFLATIONARY DEPRESSION, going to be a lot worse than the great depression of the late 20s and 1930s.
 
G

Guest

you must not be a grower. elect bills high cost of lights and nutes and soil, coco or whatever you grow in, add it all up and its not that profitable unless your really growing a lot.
Click to expand...
You're right...7 lbs every 3 months was just being a hobby grower and I don't have a clue about how expenses impact the all mighty net profit. There's parts of Cali where elec cost is about half of what many others pay and you can also get almost twice the real estate for the same $'s as you can in other areas. Reduce your overhead, grow the same, cut your prices and you can still make out better. Is growing cannabis about making coin or helping others?
 
Rosy Cheeks

Rosy Cheeks

dancin' cheek to cheek
Veteran
Interesting observation... only it's in the wrong forum.

The crop value sets itself; supply and demand in relation to risk and competition.

It's not ruled by the same mechanisms that sets the price of gold, so it's doubtful that you can compare the two and draw conclusions.
 
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Y

yamaha_1fan

I think demand is higher than supply. Who is growing and cant dump it if you have a connection? I think the real reason weed doesnt go up is the sellers are scared. If I get 3k per pound that may be the going rate everyone else is selling at. What if I go to 4k? Will I still sell? Will my customer turn around and tell his customers take it or leave it? I bet they would take it when the market is dry. then other growers will say, shit if he gets 4k, then so can I.

But who is going to take the first step?

I dont think their are any trade groups that will help organize weed growers and help us get top dollar

Is growing cannabis about making coin or helping others
Click to expand...

That depends on who you are.
 
S

socioecologist

Inflation Yes, But There's More

Inflation Yes, But There's More

The decline in real prices is definitely attributable to inflation. But why are cannabis sellers keeping the nominal price flat (i.e. $500 oz. in 1991 is still $500 oz. in 2008)? There's more to this story, but I don't think we can answer it.

I would venture a guess that growers are simply selling for what they used to buy it for--it's a learned response. You buy an 1/8th for $30-$40 in high school, start growing for yourself, find some friends who want in on it, and what do you charge? Roughly what you were charged.

As long as there is a critical mass of sellers who abide by this, all other sellers are forced to conform to these "going rate" norms--seriously, could anyone sell even the dankest ounce to their friends for $750 today? You hear about it in big cities at the street level (more hands, more money), but not directly from growers. Contrary to what most people think, growing less than a house full of pot is not going to get you rich; a small garden barely pays for itself (when including capital costs and depreciation), and even that can take a year or so.

I would be interested to see the historical prices per gram of cannabis in Amsterdam and see if there is any fluctuation--anyone have access to something like that?
 
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