Today, a new era of gold has dawned on us. After a dip in the gold price during the 1980s and the 1990s gold’s price has progressively increased. For the very first time, the gold has touched $1,200 for an ounce.
Gold has always been powerful. People consider gold as a kind of financial security in difficult times. They usually invest in gold instead of depositing money in banks. After the collapse of financial markets in 2008, the most powerful currency of the world became weaker. There was no surety of money, this led to people invest more and more in gold, which increased the price of gold.
Other reasons for gold value is its durability. It always is the same, recycled and used for various purposes. People have derived the economic value of gold since the ancient times. In Japan, people use to collect gold from old unused mobile phones and other industrial scrap and recycle it. Similarly, in Iraq, people accumulate gold dust and sell it in the jewellery shops to be recycled.
The gold demand is increasing all over the world which has increased the production and has intern lead to a number of environmental problems. An ounce of gold produces more than 30 tons of waste, which is very high as compare to any other metal. Toxic materials can leak into water bodies and contaminate the water. With the rising price of gold, many economists have suggested the powerful nations to go back to the old gold standard, wherein the US dollar and other major currencies are connected to the price of gold.
During the gold standard period, the value of a country’s currency was equal to the price of gold. This had a steadying impact on the country’s economy and the government was only authorized to produce as much money equal to gold. This resulted in a lower inflation rate. On the other side, the old gold standard can have its own disadvantages because during financial crisis the government cannot produce more money to overcome the difficult time.
In conclusion, this growth path for the yellow metal is expected to expand in the long-term due to the favourable economic situation. This may also influence other domains, like gold mines and gold-related equities.
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