Gold Prices

Like most of the stock market today, the price of an ounce of gold has been very turbulent in recent months. However, unlike the stock market, the swings have been in a relatively confined price range and dramatically higher than they were 5 or 6 years ago.

Today, gold is trading at about $900 an ounce. These are the highest prices we have ever seen, and indications are that it may go even higher. Some people predict it could reach $1,500 an ounce by year's end. Many factors go into the price of gold. It has been a safe haven for periods of time when stock markets decline and people are looking for stability with their investments. World demand can affect the price, as it has for the past few years with demand greater than supply. Decreasing currency value also drives people to invest in gold because it is a universal commodity traded all over the world. Exploration and mining also play a role in the price, as the cost of bringing gold to market often limits the supply and diminishes the amount of exploration to find new sources.

The central bank is also an important factor in the price of gold depending on the amount they hold in their reserve. Each country varies, but it has an affect on the currency value, which translates into the potential swing in gold prices. One thing seems clear- gold will not experience a precipitous drop as did the stock market. This keeps people active in buying and selling, and the belief is that as the recovery begins, demand will return and the shortage of supply will drive the price higher. Some people think $3,000 an ounce in a few years is very possible.