The price of gold is a fluctuating scale that bounces from place to place with little to no prediction on where it will be next. Though there has been much advancement in prediction strategies and planning for the price of gold in investments, no one person or market has been able to truly predict the price of day to day gold. However, there is one thing that remains constant in the changing price of gold, and it remains the single most trusted source in the race against gold value: the average increase of gold over time.
In 1934, the price of gold was $35 per ounce. This meant that a gold nugget weighing in at 10 ounces would fetch you only $350 dollars and even less than that before 1934 where the price of gold was shocking less at $20.67 where it had remained for decades. If you took that same gold nugget into the market today it would fetch you a nifty $15,000…calling that a simple “improvement” would be an incredible understatement.
The price of gold has not only flown through the roof since the 1930s, it has ripped through the clouds and is currently sky bound with the most recent price of gold at $1506 an ounce. From 1934’s price of $35 to today’s $1500 mark, the price of gold has increased 2,200%. But how did the price of gold jump to such high values in less than a century when before the 1930’s it had remained at such a steady level? The answer is in the hands of the people.
Demand is the number one source for the increased value of all things economic, and in the case of gold the power of demand is no different. After a long period in history including precious gold mining and the passing of the Gold Reserve Act on 30 January 1934(the measure nationalized all gold by ordering the Federal Reserve banks to turn over their supply to the U.S. Treasury), the already rare precious mineral started to become even scarcer, and the demand for gold sky rocketed.
Demand for gold continues to grow like wildfire in 2011 as China has shown by recently becoming the world’s largest gold consumer when the country purchased over 90 tonnnes of gold in just the first quarter of the year. If history has shown us anything with gold’s value, it is that with growing demand comes growing price, and the price of gold is due to hit new record levels before the end of the year.