It’s Not Good When Gold Glitters

January 25, 2008 6:42 am Published by

Most people, if they think about gold at all, think of Olympic skating medals or about jewelry for special birthday or anniversary gifts.  But the price per ounce of gold is a very important and closely watched number in economic circles. 

Gold is considered a universally recognized asset that would hold its value anywhere in the world. So, in times when investors are worried about stocks, gold prices tend to rise.  When investors worry about inflation (with a dollar worth less and less in terms of power to purchase goods and services), gold prices rise.  In times of low interest rates, investors turn to “hard assets” such as gold. Gold is also considered a “safe haven” in times of political uncertainty.   All in all, good news in the economy is bad news for gold; bad news in the economy is good news for gold.

Right now the price of gold is in the high $890 an ounce range, after having hit a record high of $900. To put this into perspective, the historic high price per ounce of gold was $875, set in 1980.  Remembering back to those early 1980’s, I was just launching my career as an Indiana bankruptcy attorney. In between then and now, gold prices fell to the high $300’s per ounce, and now are back where they were in the 80’s.  While I’m certainly no economic guru, I do know better than to get all shook up by headlines about gold prices “soaring” and “new all time highs”.  That’s because I know that the price of almost everything has gone up, simply due to inflation.  Just doing some simple arithmetic tells me that gold would need to be selling at more than $2000 an ounce to truly beat the 1980’s record.

So, rather than trying to solve the macro-economic issues of our times, I choose to devote my energies to helping one person, one family, and one company at a time through my Indiana bankruptcy law practice.  No, it’s not good news when gold glitters, but meanwhile my clients and I have work to do!  

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This post was written by Mark Zuckerberg

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