Titanium - Almost as Inexpensive as it has Ever Been

Inflation Adjusted Historical Titanium Price since 1941 - in Pounds Sterling and US Dollars

Titanium is a metal used in a variety of industrial application, from aerospace to marine, due to its high strength-to-weight ratio, high corrosion resistance, fatigue resistance, and crack growth resistance.  So I decided to examine the long term price history and inflation adjusted historic price of this industrially important metal.

The annual average titanium price was estimated from the price data for titanium sponge metal from 1941 to 2010 which came from the US Geological Survey.  The historical UK Pound to US Dollar exchange rate data came from Lawrence H. Officer, "Dollar-Pound Exchange Rate From 1791", MeasuringWorth, 2011 at www.measuringworth.com/exchangepound/.  The prices were adjusted for inflation by converting the nominal price into the equivalent in 2011 US Dollars and 2011 GP Pounds Stirling.  The US inflation data came from the historical CPI from the US Department of Labor.  The UK inflation the data came from Grahame Allen (2011) "Inflation: the Value of the Pound 1750-2011" Economic Policy and Statistics Section, Research Paper 12/31, House of Commons Library, UK.  From this you get the following results shown in the chart below. 

Historical Annual Average and Inflation Adjusted Titanium Price since 1941 in US Dollars and UK Pounds

The doted lines are the unadjusted nominal annual average titanium price, and the sold lines are the inflation adjusted titanium price. The first thing that becomes obvious is that the unadjusted titanium price was at its lowest in the in late 1961’s till the early 1970’s in both US Dollars and Pounds Sterling at approximately $1,040 and £2,900 per a metric tonne respectively. Additionally the nominal price peak occurs in 1981 and 2006 at approximately $8,400 and £17,000 in 1981 and $11,000 and £23,000 in 2006 per a metric tonne respectively.

However when you examine the inflation adjusted titanium price, you notice that its lowest prices occurred in 2003 in both US Dollars and UK Pounds Sterling at approximately $5,500 and $9,000 per metric tonne respectably.  The closest the inflation adjusted price came to those lows in both currencies, occurred in 1992 and 2010 approximately at $7,500 and £13,200 respectively.  The inflation adjusted titanium price experienced a constant fall until the early 1960’s whereupon it stabilised until the late 1970's.  This can be more easily seen in the chart below which only shows the inflation adjusted price on a linear axis (non logarithmic, unlike the first chart).

Inflation Adjusted Titanium Price since 1941 in US Dollars and Pounds Sterling

As it came be seen the general trend in the inflation adjusted prices was a steady decrees until the 1960’s where it stayed relatively constant (by historic standards) until the present day.  Even though there was a rapid increase in the real price in the late 1970’s, which peaked in the early 1980’s, it was nowhere near the inflation adjusted price before the late 1950’s.

Using the price in 1941 as a baseline, the inflation adjusted titanium price in UK Pounds and US Dollars was indexed.  This clearly shows how much the real price of titanium has dropped since the 1940’s.  By the bottom in the price, which occurred in 2003, it was approximately 4.88% of the price in 1941.  Even with the recent rally in the inflation adjusted price, by 2010 the price was still only just over 6% of that in 1941.

Historical Inflation Adjusted Titanium Price since 1941 in US Dollars and GB Pounds, Indexed to 1941

Even the relative price changes since the 1970’s show that by 2010 the inflation adjusted titanium price is still relatively cheap since that time.  This can be easily seen in the chart below, were the inflation adjusted titanium a price was index to that from 1975.  The price in 2010 was just under 40% of the real price in 1975 and reached a maximum in 1981 of twice compared to 1975. 

Historical Inflation Adjusted Titanium Price since 1941 in US Dollars and GB Pounds, Indexed to 1975

So from a historical perspective, once inflation has been accounted for the price of titanium is almost as cheap as it has been in the last eighty years.  Even compared to the real inflation adjusted prices in the 1970’s the price by 2010 is below the historic average of that period.

Written by Inflation Monkey. Join on Google+

Britain’s Biggest Economic Disadvantage - Their Housing Market - MoneyWeek

Britain’s Housing Market Has Left The Economy Paralysed

Here is a very interesting article from Money Week Magazine, regarding the UK housing market and its risk to kill the merger GDP growth even more than their Olympic-sized Government debit levels. With rapidly slowing global growth (in both the developed and developing world) our politicians and central bankers seem to be at a loss as to how to deal with it. 

Sir Mervyn King (Governer of the BoE) reckons that the basic problem is the banks are still sitting on too much bad debt. The debt needs its value written down (or written off) and the banks then need to be patched up (again). All that needs to happen before banks are willing to lend again.  The tr ouble is, the “significant writing down of asset values” that King refers to, would involve allowing house prices to fall.  In Britain, house prices are the single most important economic indicator, politically speaking. When house prices are falling, governments lose elections.  It’s why public policy in the UK is to keep the property market from collapsing.  

So unless there is an external factor which forces the politicians hands don't expect the policy to change.  It funny but one of the reasons Britain did well after it fell out of the fixed exchange rate mechanism (ERM) was that while it was in it the politicians hands were prevented from printing money to provide a quick economic/political fix.  Resulting in them having to implement political difficult and painful (to vested interest groups) labour market reform which provided a long term improvement to employment and GDP growth, as explained by the former UK Chancellor of the Exchequer Norman Lamont in an interview in the Daily Telegraph Newspaper on the 20th anniversary of Black Wednesday, Britain’s exit from the Exchange Rate Mechanism (ERM). 

It reminds me of an old quotation from the former UK Prime Minister Sir Winston Churchill:

"You can always count on Americans to do the right thing - after they've tried everything else" (just replace Americans with politicians)

Food for thought isn't it?

Click here is see Moneyweek - Britain’s biggest economic disadvantage - our property market

Average Income for Pensioners Has Never Been Better! (Statically at Least)

Here is a very interesting chart from the Economic Research Council Weekly Digest Chart of the Week, which was on the Average Income for Pensioners.  A recant report from the ONS showed how pensioners' net income has changed over the past ten years and it is largely good news for pensioners as they received on average 27% increase in their real income. However things aren't all rosary, when you investigate the number in detail thee is still a large amount of inequalities still exist.  

Click here is see the Average Net Income Distribution of UK Pensioners.

Expect UK house prices to fall as banks pull back from the property market - MoneyWeek

The Prospects for the UK Housing Market Don't Look Promising!

The most important drivers of the UK property market is borrowers’ access to credit.  Until the resent credit crunch, almost everyone had forgotten about this and thought is was just aspirational and want that drove it.

So with this in mind how is the UK property market going to perform in the next few years.  statistics - Banks are pulling back from property - expect prices to fall. 

Macro Man: Life's Little Luxuries

The Italian Government Takes No Prisoners In Its War On Tax Evaders

If you are in any doubt about the scale of the super yacht exodus accros the Club Med Countries have a quick look at this report on empty marinas across Italy.

Meanwhile who’d want a new Ferrari after last year’s campaign against tax evaders – which involved tax inspectors raiding the owners of luxury cars in smart ski resorts and visiting Ferrari-owner events to check the tax returns of every single driver?  According to the blogging hedge fund manager at www.macro-man.blogspot.com the “persecution of Ferrari owners” has become so severe that they are selling them in their thousands. You can now pick one up for the “price of a new VW Polo”.

This is not only bad for Ferrari but all Luxury Car companies, not only are sales being hit by general austerity and shocking enforcement of the law, but global second hand prices are likely to be hit by the new exodus of cars from Italy.  “This is going to be “a vicious value collapse” says Macro Man.

Will this mean people will be turning against ostentatious wealth, and luxury brands associated with it?