Eye-opening: the iPhone/gold ratio
News Arnulf Hinkel, Financial Journalist – 25.09.2023
To assess the relative performance of gold, the price of the precious metal is often set in relation to other relevant performances, as with the gold/silver ratio or the Dow Jones/gold ratio. However, the function of gold as a store of value can be better understood when set against consumer goods, e.g. with the Mac/Gold Index, which compares the price development of a Big Mac with that of the precious metal. An investment consultancy has recently contrasted a product from the high-tech communications sector with gold: the iPhone.
An increasingly expensive technological innovation
When the first iPhone was brought to market 16 years ago, it represented an absolute technological sensation, labelled “Invention of the Year 2007” by Time magazine. Unlike many other innovations – in consumer electronics, for example – the price of an iPhone has not gone down over the years. While the first iPhone cost around US$600, the current 15 Pro model is US$1,500, and even the slimmed-down 15 model has a price tag of around US$1,000. Of course, the new smartphones have much more to offer than their predecessors. A special edition of the “In Gold We Trust” report looks into the question of how many grams of gold would, over the course of time, have been and would today be necessary to buy an iPhone.
Calculated in gold, iPhone prices have dropped
The dollar price of the current iPhone 15 Pro is a whopping 150 per cent higher than that of the first model launched in 2007, which translates to an annual “iPhone inflation rate” of 5.9 per cent. However, paid in grams of gold, the price development looks quite different: if you would have had to pay 28.6 grammes of gold for the first iPhone, a mere 24.26 grammes are sufficient to buy this year’s Pro model. This is because since 2007, gold has gained drastically in value against the US dollar, but also against all other fiat currencies. Speaking of gains: in February 2023, a first-edition iPhone in its original packaging was sold at public auction for over US$63,000 – a performance which even gold cannot keep up with.
