Of all the items man has used as currency, gold has far been the most prominent. It doesn’t matter if it is the most valuable, or the rarest. What does matter is that man has chosen this commodity to be a standard as a world yardstick for wealth. As a matter of fact, gold is one of the few metals that is so cherished by so many.
Today it’s easy to find the latest price of gold, from the Internet, the financial section in the morning paper, market news on TV, and even as a text message on your cell phone. But it wasn’t always like that. For decades the price of an ounce of gold was quite steady – so investors didn’t see the value in following the price changes.
But recently, the price of gold has been changing, and a lot of interest has kindled for the precious metal. What once was under a hundred dollars in the 1940s is now over 600 dollars. This has brought investors around in great numbers.
The price of gold is linked to how strong the US dollar is. Because of the great increase of gold over the last ten years, many investors believe it is a good time to buy and speculate. But remember that gold is a commodity, and doesn’t sit and earn interest like a bond in the bank. Your profit will be based on if the selling price is higher than the price you purchased it for, less any brokerage fees.
So when the price of gold goes up, you should be concerned about the value of the US dollar. This is because gold increases as the value of the dollar go down. Since we are at the 600 dollars per ounce level, you can be sure the value of the US dollar is fairly low. This is called a lack of confidence.
Should you invest in gold today? We believe it is a pretty safe bet. Given current world conditions, and the time now before the US elections in 2008, gold will be only increasing in value.