Gold at $1500 oz. – Is it a big deal?
The officially traded price of gold has risen to a record $1,500 per ounce. Silver reached a 31-year high when it reached $44 per ounce. Concerns about U.S. debt and the Greek and Portuguese economies are cited for the rush to a safe haven.
Is it a big deal?
It takes money out of the stock market, bond market and mutual funds. Recently The University of Texas converted $1 billion out of it’s endowment fund and converted it to gold brick. Investors are scared, they only tolerate growth and the chance for losses is prompting them to run for cover, and historically precious metals offer protection from market collapse and inflation.
In the United States, according to Measured Worth, the price for an ounce of gold in 1791 was $19.39. It hovered around the $20 mark until the Civil War and then settled back down to around $20 until the mid-1930s when it rose to $35 and stayed at that price until 1968. Nixon took the U.S. off the gold standard and the price began to rise and fall with people fears.
In 1791, if a man could put his hands on $20 every week he was far from poor. A twenty dollar bill in 1791 translated into modern worth is as follows:
In 2003, $20.00 from 1791 was worth:
$389.49 using the Consumer Price Index
$415.09 using the GDP deflator
$6,996.49 using the unskilled wage
$12,303.20 using the GDP per capita
$882,489.05 using the relative share of GDP.
It would take a Nobel Prize winning economist to make sense of market forces in 2011, but the price of one pound of gold this week, is as far away from the ordinary man as it was in 1791 and almost all subsequent years. It’s a rich man’s game.
About Post Author
Holte Ender
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It isn’t shocking that gold is $1500 per oz considering: 1. The dollar isn’t worth much 2. It’s “fashionable” these days for the wealthy to buy gold, so the price has risen accordingly.
Considering a standard brick of gold would cost over half a million dollars, I think it’s fair to say that not many of us will be buying one. There is always Sovereigns or Kruger-Rands, lighter, therefore cheaper, but why buy into the fear.
Gold isn’t just a rich man’s game these days. It’s not unusual for a working class person who has worked for a long time to have a few ten thousand USDs in savings. If you’ve weathered the past two years and come out the end in fair shape you might be looking for an alternative place to put a bit of your money. Gold and silver are very reasonable investments for someone who wants something that will be usable if everything else crashes and burns.
I thought the rappers had cornered the market in their teeth
So, Holte, do you have a sack of gold I could borrow old buddy, old pal, old friend? I will get it back to you as soon as I can. 🙂
I’m fresh out right now Bill, I suggest you go to Memphis and borrow some of Elvis Presley’s old stage clothes.