Whats Behind the Record Price of Gold?

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Posted at 2008/02/12/1218 by fumf
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RTFA: http://www.livescience.com/history/080115-gold-sta…

The price of gold continues to hit record highs this week, trading above 900 an ounce, but the precious metal has been highly valued for thousands of years.

The latest high prices for gold are part of an upward trend that began in April 2001. Analysts explain the bull market in gold by pointing to a slowing economy and the metals increasing scarcity in the ground.

“Gold is inversely correlated to the dollar,” said George Milling-Stanley, an analyst for the World Gold Council, an organization funded by gold mining companies. “Gold is a safe haven in times of political as well as economic turmoil.”

Trouble is, this extremely rare commodity is getting harder to find.

Miners don’t happen upon rich veins of gold today like they used to. Big mining companies nowadays hope to find mere flecks. Although gold is mined in more than 60 countries, it is estimated only 167,600 tons of gold have ever been mined. In comparison, 999 million tons of iron are extracted annually.

As of right now, the price of gold is approximately $905 per ounce

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    The article makes an interesting point about the 1980 $850 high:


    After 28 years of inflation and a weak dollar, it will take a big push in the markets to surpass the 80s high in real terms. Gold would have to hit $2,200 an ounce in today’s dollars to match the 1980 price, Milling-Stanley said.


    I interpret this to mean, "what quantity of standard basket items could you purchase."

    Although I don't know where to get good commodities prices, here are two questions that would get to the heart of the matter:

    * how much petroleum could be purchased for an ounce of gold in 1980 and 2008?

    * how much milk could be purchased for an ounce of gold in 1980 and 2008?
 

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