Then and Now, a hamburger comparison.

This past weekend we had breakfast at Wimpy in Potchefstroom. I decided that wanted a “Button-up” breakfast (I’m sure I’ve had it before). The reaction? “That's not a Wimpy breakfast!”I Googled it to find out whether my memory was playing tricks on me. I eventually didn’t find out whether it exists or not, because I came across a 1972 Wimpy menu and the what was on there, compared to what I saw on the 2019 menu, was a clear sign that our savings are in danger (think flashing, neon lights type sign).

I analysed it (of course) and I would like to share the results with you. I compared the following items from that 1972 menu to the current prices (Found on https://wimpy.co.za/classic-menu/breakfast/ and https://wimpy.co.za/classic-menu/lunch/ ) :

• Wimpy Burger
• Cheese Burger
• Bacon & Eggs
• Toasted Cheese Sandwhich

Analysis:

Wimpy Burger

1972 : R0.25; 2019: R49.90

Percentage increased in this time-frame: 19860%

Inflation rate: 11.93 % per year

Cheese burger

1972: R0.28; 2019: R59.90

Percentage increased in this time-frame: 21292%

Inflation rate: 12.09 % per year

Bacon and Eggs

1972: R0.60; 2019: R37.90

Percentage increased in this time-frame: 6216%

Inflation rate: 9.22 % per year

Toasted Cheese Sandwich

1972: R0.20; 2019: R39.9

Percentage increased in this time-frame: 19850%

Inflation rate: 11.93 % per year

The price of a Wimpy burger in 1979 was probably around R0.55. (I extrapolated the value of the Wimpy burger to determine the price in 1979, which is the earliest date in the dataset from www.gold.org)

This got me thinking: These items have an intrinsic value. I wanted to see how they compare to the gold price, something I perceive as having intrinsic value. What I found blew my mind! I calculated the inflation rate per year, per item and plotted them in relation to the gold price ( all "adjusted" to start at 1 ) to compare the inflation or rate of change. ( See figure 1)

This means that the ONLY variable component is the value of the rand. I have plotted this too. (GASP) ( see figure 2 )

But how does this put my savings at risk? I would like to try and simplify this by demonstrating how many Wimpy burgers your Savings could buy in 1979 (as stated before, this was the first mention I could find of the gold price).

If you had R1 million saved in a bank account in 1979, your savings could buy 1 818 181 Wimpy burgers @R0.55. If you left that R1 million in you bank account until today, your R1 million would only buy 20 040 Wimpy burgers @R49.90. This means that R1 in 1979 would be worth R0.0116 in 2019. You have lost 98.84% of you buying power. You can also think of this second figure as you bank balance.

If you had your R1 million value in gold bullion ( 3891 oz) in 1979 then your money would, today, buy 1 727 557 Wimpy burgers! Your savings retained it's buying power. (The difference can be assigned to price variability, i.e. supply and demand.)

Are the lights flashing yet? This exercise definitely showed me that it is really of utmost importance to save in gold