Gold Price and the US Dollar
The gold price is rising steadily and has now hit the 800 dollars an ounce mark as predicted by various gold analysts.
This is due in part, of course, to the depreciating dollar but also the appreciation of gold as a safety net and possible future investment.
Put simply the value of the dollar is decreasing. Removing gold as a backing for the US dollar was thought to be an excellent move by the Federal reserve in the early seventies, as it gave them more manipulative control over the dollar. However this is now coming back to bite them as the excessive printing of more money to shore up the dwindling value only serves to decrease the value even further. The US government may not mind too much as it means they can pay their debts with a depreciated dollar from the time those debts were incurred. In addition exporters, farmers and the like, are enjoying the bonus that comes with a depressed dollar against foreign currency
But what about the person in the street? The drop in dollar value means less value for the salary or wage earner with higher prices and less savings. It means higher costs for imported goods and less value for the dollar.
This is where gold comes in. while the dollar is busy ferreting its way to the bowls of the earth, gold is soaring to spectacular heights.
Actually, the value of gold has never really changed much. In terms of purchase you can still buy the same value of goods with an ounce of gold now as you could 50 years ago, although the perceived value of gold in dollar terms has risen tremendously. It still is an ounce of gold. 50 years ago one could purchase a man's suit for an ounce of gold. These days it would take somewhat less than an ounce of gold to purchase the same men's suit. Gold in fact has increased in purchasing power over the years and looks set to continue.
It seems that, by investing in gold such as coins, bars and even exchange traded funds, one can improve ones asset base or at the very least, retain ones value for future use.
So when it comes down to how to buy gold and the gold price vs the US dollar is concerned, gold, it seems, is winning hands down.