gold is at $506.00 an ounce. What does that mean?

[johncoby2]

I used to buy and sell jewelry in the mid 80's and it hit $444.00 at the time.

What does this mean?

[MissB]

1. The price is up?

[justabob]

9. higher than its been in two decades nt

[cantstandbush]

22. Last time I weighed my credit card it was $2,500/ ounce.

For most people the price of gold doesn't mean anything. Just an opportunity for rich people to get more wealth and for the poor to be made poorer.

[OPERATIONMINDCRIME]

2. It Means It Now Costs As Much As Some Primo Kind Bud...

[LiberalVoice]

7. Primo Kind Bud indeed. nt

:smoke:

[the_real_38]

36. Like that Danish-Afghan strain...

...n/t

[knight_of_the_star]

3. Not much for America

The US Dollar isn't based on Gold anymore.

[Elwood P Dowd]

4. It means the economy sucks

dollars are worthless IOUs, and Bush is an idiot.

[dsc]

5. Usually high gold prices

mean that money is unstable. Prices have been rising as of late but not as much as they did in the early 1980's when gold went throught the roof.

[GOPisEvil]

6. Some people fear inflation.

As my economics professor used to say, "Gold is not an investment, it's a hedge against inflation."

[Norquist Nemesis]

31. That's what I remember from econ

also. It was something like, 'gold is like an inflation thermometer. As it goes up, it indicates inflation is heating up too.'

[Traveling_Home]

8. Chinese couples discovered/allowed ....

wedding rings - millions of rings a year needed for this new and increasing market as China's economy grows. Gold's a finite resource.

Maybe?

[papau]

12. That is a CNBC Cramer idea - but seems very wrong as industrial and

Jewelry use of gold is minimal relative to amount mined.

[newyawker99]

27. Hi Traveling_Home!!

Welcome to DU!! :toast:

[TankLV]

10. It' means that I won't be buyin' much any time soon.

[Redstone]

11. Not much. It's just speculation, as usual.

It got over $750 in the early 1980s, and the net effect on society in general? None.

Redstone

[Zynx]

13. In the early 80s or late 70s(I can't remember which) it was $900.

It is either a sign of inflationary pressures, anxiety, or a little of both.

[FloridaPat]

14. More economic crap. These economists don't know anything.

Here's a link that says rising gold prices is good for the economy:
http://www.bibleprophesy.org/silverismoney/Rising_Gold_Prices_will_help_the_Economy.html

Here's one about how rising prices are bad:
http://money.cnn.com/2005/06/24/markets/gold_inflation/index.htm?cnn=yes

[oioioi]

15. Actually, some economists are quite insightful.

http://en.wikipedia.org/wiki/Keynesian_economics

[Rex]

16. It means that the paper rectangles and zinc slugs we trade as consumers

are now worth less then when you used to buy gold in the 80s.

[spindrifter]

17. Who's buying? East Indians? Chinese?

I would not be surprised if some of the Asian wealth is going into precious metals, a traditional investment.

[drb]

18. on one hand, it doesn't mean anything, because over the long haul...

...I would expect the price of goods and services to stay relatively constant in terms of "loaves of bread per gram of gold" or "hours of hard manual labor per gram of gold."

On the other hand, one can look at it as the price of gold actually being constant, and the value of the dollar rapidly going to hell in a handbasket.

I wonder if the fact that we're borrowing $2 billion a day from the Chinese to keep the bush regime propped up has anything to do with it.... nah - no way! That's just a coincidence. :sarcasm:

[berni_mccoy]

19. It's a hedge against a declining dollar and rising inflation

Investors are increasing their holdings in gold to prevent too much loss against the dollar and are unsure of what else to put it in.

The cost of most commodities is on the rise (inflation has been creeping up and now its going to rear its ugly head).

[NinetySix]

20. Contrary to many of the above posts, it actually means a lot.

The price of gold is not STRICTLY the value of gold. That doesn't make a great deal of sense until you take into account the fact that one ounce of gold today will buy precisely as much today as one ounce of gold has bought at any time in the past, as far back as ancient Rome.

For many years, even after the US had left the gold standard, the price of gold was fairly stable at around $36 per ounce. During the recessions and crunches of the 1970s and '80s, the price of gold began to rise precipitously. The price of gold has never returned to that low numerical value because the value of the dollar has never regained that strong economic value.

To see gold valued at over $500 per ounce today is to see the dollar indexed at a significantly lower value than it was in the summer of 2004, roughly $100 an ounce lower (i.e., a 25% decline in its buying power).

You can watch the price of gold rise at the same time as the relative value of foreign currencies against the dollar rise, taking into account, of course, the price of gold in those currencies. So while the value of the Euro has declined somewhat over the last year, the value of the Canadian Dollar has skyrocketed from about $.61 US back in 2002 to about $.86 US today.

The consequent devaluation of the Dollar which follows a rise in the price of gold has been a good thing for US industry in the past, because exports of US-made goods increase due to their declining prices in foreign currencies. At least that's how it was when (as some of you will recall) the United States actually HAD a manufacturing base. What it means now is that the price of cheap, foreign manufactured goods are set to rise with the decline in value of the dollar, so your Wal-Mart purchases are going to be seen to cost increasingly more.

And the price of gold will likely continue to rise as the US economy continues to flounder.

[Ediacara]

21. It means the US dollar is in a long slow slide

And has been since 2001. Bush's extreme deficet spending has made our currency very very weak.

[drgoodword]

23. Inflation and general economic concerns are probably the cause

Hi everyone...long-time DU reader (great site!), first-time poster and a neighbour from the north (in Toronto).

I agree with the posters in this thread who've pointed to inflation concerns as the main reason the price of gold has recently gone up. Furthermore, I'd say concerns about the US dollar and economy are also a factor.

The writing's on the wall with regards to a US housing market crash (it's already peaked, and housing crashes can take 3-6 months to ripple through to msm consciousness), and everyone knows America's economy has been driven for the past four years by a massive credit/housing bubble, courtesy of Mr. Greenspan.

Despite some future price fluctuation, I'm on the side of the bears and goldbugs this time around: gold will generally continue to trend upwards for the next year, and it's smart for everyone to have at least some bullion in their investment/retirement portfolio as a hedge. 20% is not too much; I've gone higher with my own investments and those of my family. It's no coincidence that for the first time this year Canada has allowed gold bullion as a investement within an RSP (Canada's 401K).

Here's a recent Reuters article that talks about investment demand being largely responsible for the recent increase in the price of gold.

[Tsiyu]

24. Welcome to DU, drgoodword

:hi:

[newyawker99]

28. Hi drgoodword!!

Welcome to DU!! :toast:

[drgoodword]

37. Thanks for the kind hellos!

Cheers!

[BeTheChange]

35. I think as the housing burst becomes more evident..

and the euphoria of the holidays passes... gold is going to shoot up over the next few years to places even speculators dare to tread.


As we keep flooding the market with newly minted worthless paper, it becomes increasingly evident to our foreign investors that our administration is a bunch of freaking idiots. If I was going to invest in stocks right now, Newmont mining would be looking pretty darn good and Ill have to admit that I have a bag of 90% silver and some Eagles on the way for safe keeping.

Cheers.

[MercutioATC]

25. It means that if you want to buy an ounce of gold, it'll cost ya $506.00

I haven't seen any hard reason for the increase. Looks like it's all market-based.

[DoYouEverWonder]

26. It means I should kick my husband's butt

because 3 years ago I wanted to invest some of our money in gold and he wouldn't do it. We would have doubled our money at this point.

[newportdadde]

29. Its an inflation hedge and dollar hedge. You can also trade it now.

I don't know the symbol off the top of my head but its based off of 1/10th an ounce price and you can trade it like a stock. You could also trade miners which I use to (NEM) but I moved out of that stock in the summer of 04 as it was doing nothing(still isn't really) and got into oil.

What it means is people are thinking inflation is here and going to get worse, they are uncertain or fear a terrorist/world wide event, they think our dollar is going down the crapper(it is). Just think of the DOW almost back to 11k, THEN figure in the decline of the dollar, this market is still at 8k in reality.

Also Gold typically rises this time of year as India is in its big buying cycle. Individuals in China are also good savers and they like Gold as a method to do that, more jobs there is probably putting some pressure up on Gold.

For myself I will stay in black gold texas tea for now which I entered back in 04.

[malmapus]

30. It means I F'd up when I took that Sun stock and let my ex get the gold

when we broke up years ago.

[Silverhair]

32. When adjusted for inflation, it was higher back then. NT

[yellowcanine]

33. It might just mean that commodities in general are up. Copper is around

$2 a pound, up fron 70 cents several years ago when that other guy was President.

[KharmaTrain]

34. The Last Time It Ran Up So Quick, So Fast...Late 70s

Some here may remember when gold was $35 an ounce...then during the oil squeezes of the late 70s it shot up to over $200 an ounce. Oil prices had doubled and the dollar had weakened (also another big sign)...people saw tough times ahead and the price began hording...thus the price shot up. It finally stabilized around the $300 level throughout the 80's...and some will say it was due to rise...the price of everything else has.

History appears to be repeating...oil prices have again doubled and the combination of defecits, growing debts (Iraq) and a weakened dollar is fueling the price of gold upward again.

If the next step happens, be prepared for a surge of inflation and increases in all types of goods...especially imported as this is a sign of weak dollar. People who were stocking away the dollars a decade ago are now putting it back in gold. A real confidence booster to meeester boooosh.