Gold is in the news constantly–mostly because it recently broke the $1,300 per ounce barrier. It is trading today as high as $1,348 on the spot market, a historic record.
In fact, most precious metals are booming these days, despite the economic downturn. Even silver has risen 15% in just a few weeks, to an astonishing $23.04 per ounce, as opposed to $19.10 per ounce at the end of August. This isn’t a record for the price of silver, by the way: it peaked at $47 in 1980, which is equivalent to about $140 in 2010 dollars.
But it’s still pretty amazing.
Recently, I’ve seen some nattering nabobs of negativity spouting off about how gold is getting ready for a big fall, since there’s no way they can see that it should be so highly valued. After all, it was worth less than $40 an ounce until the mid-1970s, and (they say), it shouldn’t be worth 60 times what silver is, since it’s not 60 times less common. (Gold is, in fact, about 20 times less common than silver).
Well, let’s cut through all the clutter here. Gold was cheap before the mid-1970s mostly because the gold standard held back its value. All you have to do is look at its meteoric rise thereafter to realize this. No matter what happens, gold is almost always a good investment, especially in the form of privately-held bullion.
Now, I don’t expect the monetary system to completely collapse anytime soon; nor do I see the government reaching out and just stealing our wealth, as some gold bugs have been claiming will happen Any Day Now. (They’ve been saying this for decades and you can check out my take on the 3 myths about gold bullion coins here.) But if either ever did occur, privately-held bullion would be massively valuable, wouldn’t it?
You see, gold is nature’s perfect money. Throughout history, cultures have gravitated toward gold as the basis of their monetary systems. It has a remarkable allure, and that’s something that has lasted as long as human civilization.
That’s why gold is fluctuating as high as $1,348 an ounce, even as the U.S. government is doing everything it can to prop up our economy. Gold has maintained its incredible rise throughout the worst economic downturn since the Great Depression. Gold is beautiful, and it’s useful in so many ways.
We always come back to gold.
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