Analyzing the Market and Current Gold Prices

Gold value has changed drastically in the last 10 years. In early 2001, gold prices hovered steadily around the $250-$300 mark (for one ounce). They eventually began to rise gradually with current gold prices peaking at nearly $1400 per ounce at the beginning of 2011. Even though gold prices can decline and then rise, the overall value tends to remain in a stable range.

The recession has certainly played a role in the slight fluctuation of current gold prices. Usually when currency value decreases, the value of physical assets will increase. This is because during times of economic hardship, many people purchase a hedge against inflation. A hedge is used to protect wealth by storing it in different places that way if one risky investment plummets, another will be able to pick up the slack so to speak. Higher demand with a fixed supply will tend to lead to higher prices in the market. Since the demand for gold is increasing inversely to the rate at which inflation stifles the dollar’s overall value, the result has been higher current gold prices. Remember that higher current gold prices are a result of increased demand and do not necessarily indicate the overall value or net worth of the asset over time.

Even though gold prices are on the rise for the most part right now, they are subject to slumps and slight declines. Regardless, gold is still a stable investment because of the physical properties the asset carries. Gold is not only a beautiful and luxurious precious metal, but it also has many other stores of value. Gold is a natural scarce resource giving it more worth and limiting the supply. Scarcity exists because resources are limited, and when supply is limited, increased demand cannot be met. Gold can be fashioned and sold as jewelry, coinage, bars, or treasures. Gold can also be leveraged or purchased as a future or stock.

Some future projections extrapolate that current gold prices are not tapped out at somewhere between $1300-$1400 per ounce. They believe these numbers will continue to increase until gold reaches the $2000 mark. Gold is an investment with very little risk because even if current gold prices don’t continue to move swiftly up, they will probably level off rather than plummet down. The asset is in the substance of the precious metal and will probably continue to prove to be a friend of investors and businessmen.


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