Gold's Enduring Value: A Millennia-Spanning Constant in Purchasing Power

A recent observation by Lawrence Hamtil, shared on social media, highlights gold's remarkable stability in purchasing power over millennia, drawing a direct comparison between the earnings of Roman centurions and modern-day U.S. Army officers when measured in gold. Hamtil's tweet, which quickly garnered attention, referenced a new paper on gold, stating, "Gold's value has held so constant that in gold terms US Army officers are paid about the same as were Roman centurions millennia ago." This intriguing claim points to gold's historical role as a consistent store of value.

The tweet links to a paper titled "Understanding Gold" by Claude B. Erb and Campbell R. Harvey, published on SSRN with abstract ID 5525138. Posted on October 2, 2025, the paper delves into gold's investment characteristics and its reliability as a hedging asset. It also explores factors contributing to gold's high price today, including its financialization and the global trend of de-dollarization. The authors suggest that potential changes in Basel III regulations, allowing commercial banks to hold gold as a high-quality liquid asset, could introduce a significant new demand shock.

The concept of "The Golden Constant" posits that gold maintains a relatively stable purchasing power over very long periods, despite short-term fluctuations. Historical analyses by researchers like Roy Jastram and more recently by Erb and Harvey, have explored this phenomenon, suggesting that gold's real value tends to revert to a historical mean. This long-term stability is often contrasted with the volatility of fiat currencies and other assets.

While the "Understanding Gold" paper primarily focuses on gold's investment aspects and future market dynamics, the broader "Golden Constant" framework supports the idea of gold's enduring purchasing power. The comparison between Roman centurions and U.S. Army officers, frequently cited in discussions about gold's historical value, illustrates this stability by demonstrating that a specific amount of gold could historically command a similar level of goods and services, or in this case, a comparable standard of living for military professionals, across vast stretches of time. This perspective offers a unique lens through which to view gold's role beyond its current market price.