gold investment

Gold has been used throughout history as a form of payment and has been a relative standard for currency equivalents specific to economic regions or countries. After World War II a gold standard was established following the 1944 Bretton Woods conference, fixing the gold price at US$35 per troy ounce, or, in effect, pricing the U.S. dollar as 1/35th of a troy ounce of gold.

The system existed until the 1971 Nixon Shock, when the US stopped the direct convertibility of the United States dollar to gold. Since 1919 the usual benchmark for the price of gold is known as the London gold fixing, a twice-daily (telephone) meeting of representatives from five bullion-trading firms. Furthermore, there is active gold trading based on the intra-day spot price, derived from gold-trading markets around the world as they open and close throughout the day. The following table sets forth the gold price versus various assets and key statistics:


In March 2008, the gold price exceeded US$1,000,[7] achieving a nominal high of US$1,004.38. In real terms, actual value was still well below the US$599 peak in 1981 (equivalent to $1417 in U.S. 2008 dollar value). After the March 2008 spike, gold prices declined to a low of US$712.30 per ounce in November. Pricing soon resumed an upward momentum by temporarily breaking the US$1000 barrier again in late February 2009 but regressed moderately later in the quarter.

After fluctuation returned near the US$1,000.00 mark in mid-September 2009, international gold markets peaked at US$1,023.30. Pricing later declined moderately again in late September 2009, falling back to US$991.70 for the week ending on September 25, 2009.

Later in 2009, the March 2008 intraday spot price record of US$1,033.90 was broken several times in October, as the price of gold entered stages of new highs.[8][9] Current 2009 peaks have been attributed to media speculation[citation needed] expressing both: inflation will accelerate; and the likelihood of an end to dollar hegemony. India had recently purchased over 200 tons of gold from the IMF contributing to a surge in gold prices in November 2009.

Financial commentator Jim Rogers predicts that gold will reach US$2000 per troy ounce without citing a time frame.[10] Some analysts attribute this to central banks diverting their reserves away from US dollars.[11] However, economics professor Nouriel Roubini sees another investment bubble that will burst spectacularly.[12]