Gas Up? Gold Up!

June 1, 2009 | By | Reply More

gas-prices-up By now, you’ve noticed the price per gallon of gas inching, no vaulting up at the pump once again.  Just in time for vacations and summer fun, the price of gas skyrockets to heights not seen in months.

And with it, the price of gold.

The price of gas, we are led to believe, is increasing because of course, the OPEC ministers stranglehold remains in place.  There is no shortage of oil. In fact, storage tanks at refineries all around the world are said to be full and waiting to be shipped to greedy consumers, ready to purchase it.

But those customers are suffering through the worst recession in more than 30 years.  And gas prices starting an upward trend again is never good news, but in fact is particularly bad news in a struggling economy.   It depresses American consumers who were only beginning to feel good again about their economy, about their prospects for returning to financial health, and about their future.

The price of gold has been tied to the economy because of its status as a safe haven in tough economic times.  Experts thought that gold would raise to $1000 per ounce later this year, but it reached that height early, when consumers reached a near-frenzy level of concern about the economy.  It sank back down to teeter just above the $900 per ounce level where it stayed for some time.

Now they have found some level of calm and confidence, however halting, has been restored.  But the price of gold is inching up again.

Two weeks ago, it reached the $950 per ounce barrier.  Now it is at $960 per ounce.

What this says to me is that while American consumers may wish to see a return to economic health, they are still far from certain of it.  They are being given conflicting messages.

They are told they need to get out of debt, and the government just enacted new credit card laws that will protect consumers from some credit card companies increasing interest rates and doing other predatory actions against consumers who struggle with controlling their spending.

But at the same time, experts know that for the economy to recover, the joyful spending by consumers must resume.  It must start again and become plentiful.  New cars have to roll off lots.  Homes have to be purchased.  And the dollars have to begin to circulate in the economy again for it to return to health.

I have always heard that it’s best not to worry about what someone says, but instead to focus more on what they do.  In this case, consumers seem to want to believe, but their investments in gold, which are fueling an increase in the price, are what says more to me.  We may see more increases in gold prices ahead before the economy returns to a healthy state of operations.

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Category: Gold Prices

About the Author ()

I'm a professional journalist with several media outlets both in Los Angeles and in Washington, DC. I have covered politics, major disasters, the markets and the economy for several years. I'm interested in covering gold prices because of what it indicates about the economy and the money supply. I try to stay positive, but right now, we are in a difficult situation financially and I'll try to bring the economy and the price of gold into focus in this blog.

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