All you have to do is look around to realize that the economy has been shaky for quite some time. Unemployment is on the rise, markets are uncertain, and people are struggling to get by. When the economy has been down historically, gold has tended to increase in value, and today is no exception. In 2000, gold was worth a little less than $300 an ounce, and today it is over $1000 per ounce without any signs of slowing down. Why has gold done well when the economy has not, and how can this benefit you?
There are a few things that happen and that people are afraid will happen when an economy is troubled. One is that debt levels get too high, including government debt, which means that governments issue more money to pay off these debts. When there is more currency out there for the same amount of goods, this means prices rise and inflation kicks in. One of the reasons gold rises in terms of dollars or any currency is because there is a fixed amount of it and it retains its purchasing power. Investors frequently talk about gold as a “hedge” or protection against inflation of prices.
Since the problems with debt and slow economic growth seem like they will continue for now, many people are looking to keep at least some of their money in terms of gold. Those considering keeping some of their savings or investments in gold have several options. There are stocks in markets that invest in gold, stocks of gold miners, gold holding companies, and the option of buying your own physical gold to keep. In addition to investing, selling one’s own gold would fetch a high price in today’s markets for those strapped for cash. Whether buying or selling, it is certainly a hot time for the gold markets.