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Tuesday, April 11, 2006

How Much is Gold

How much is gold theses days?

In fact the value of gold actually does not change much. What does change is the amount of money needed to buy gold.

Apart from some isolated peaks, gold’s purchasing power has not essentially changed very much over the past 200 years.

What has changed however, is the value of the dollar. This has steadily decreased over the years and with an accelerated inflation since the US government ceased using gold to back the currency and just started printing money to handle shortfalls and boost the economy.

In fact if they were to return to a gold backed currency then it would take over 52 thousand dollars to buy one ounce of gold, since the printed paper we call the dollar has decreased in value so much.

So the question is not so much, how much is gold, but more, what is the value of gold these days?

An ounce of pure gold will purchase pretty much what it purchased twenty years ago, or one hundred years ago or even two hundred years ago. In times of economic crisis or inflation and depression (sorry, now called recession) gold always stands out as a stable value so that, even when you might need wheel barrows of dollars to buy a loaf of bread, a tiny gold coin would be enough for you to buy a wheel barrow full of bread.

So when you ask how much is gold you are really asking what can I buy for this gold and the answer is, just as much as you ever could.

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