Can you enlighten me on the following? (1) If I want to see the inflation-adjusted price of gold, or any other commodity when priced in USD, what inflation index is most suitable to use? (I occasionally use "US CPI Urban Consumers, Non-Seasonally-Adjusted”, with Bloomberg symbol "CPURNSA: IND".) (2) is your suggested inflation index in the chart library? (3) if the price of the commodity is not in USD, is another inflation index more suitable?

Eoin Treacy's view

Thank you for some interesting questions which may be of interest to the Collective. The Index I have always used for inflation adjusted calculations is the US CPI Urban Consumers SA Index with back history to at least 1948. The SA stands for seasonally adjusted and I believe that is the better way of looking at the data because the adjustment smoothens out the chart. 

The ticker for the US CPI Urban Consumers SA Index is CPI INDX Index and yes, it is in the Chart Library. 

Commodities are globally fungible and used in every country. For cocoa in Pounds or Rubber in Yen or Palm Oil in Ringgit we should ask ourselves is the domestic inflation rate more important that the global inflation rate. It is unlikely the USA would go through an inflationary phase without the rest of the world also experiencing a similar condition but the reverse is not true. Therefore, while we always need to be sensitive to currency fluctuations I don’t think they are a relevant consideration for inflation-adjusted charts. 

For example, this inflation adjusted chart of gold confirms that the price tested the 1980 bubble peak in 2011. 

Here is a link to a video with instructions on how to create this chart.