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What About Gold?

What about gold, now that we are all caught up in worrying about the economy, gas prices, food prices, unemployment and world financial dominance?  Will gold provide a hedge against inflation and keep us from the brink of ruin if we hang on to a few assets and somehow manage to add a few as we go?

The economic news is mixed, it would seem.  We are officially in recovery here in the United States, but our concerns continue as we try to sort out what the word recovery will really mean for us.   The economy still seems far from what most of us have seen during our lifetimes and even further still from stable. 

 Oil prices are slipping this week, with the price of crude slipping to under $80 a barrel (considered outrageous a few years back, I know!) on worries about the world economy and whether it will recover.  The price of oil slipped and investors fled that worrisome risky business to… the dollar.  (Apparently, it’s regaining its lovely green color these days.)

The price of gas also is a key factor in several leading reports that suggest that food prices will be very high for the foreseeable future.   A harsh winter, high costs of seed and chemicals to grow the fruits and vegetables (or sadly, even higher costs of organic produce) and the cost of shipping will all factor in to concerns about this part of life.

Unemployment seems to be beginning the turn-around, but it’s turning around at painfully slow speeds.  It now appears to be improving, but it is still at near record highs.  It’s a tough time to be unemployed and record numbers are feeling this pinch.

As all of these factors combine, there is the growing concern among Americans that maybe the glory ride is over.  An increasing number of experts are predicting that perhaps China is about to emerge as the leading global financial power.  I have wondered that myself, and asked a friend visiting from the UK that very question recently. 

She looked at me with a bit of annoyance.  She said that most people from around the world think Americans have nothing to complain about, because as bad as we might think things are, they are so much worse “at home in the UK.”  She told me that while we are hearing the faint flickerings of recovery, they are still in free-fall on the other side of the pond.

Certainly this seems true in Greece, where the country is dealing with massive debt and shortfall, and trying to hold its creditors at bay.  It’s also true in Iceland, where the nation’s largest bank failed and then voters were asked by referendum whether they would pay to cover its losses to investors in Europe.  (Not surprisingly, the answer was an overwhelming, 97% “no.”)

But the price of gold, where is it in all this?   It is hovering just above $1100.  It’s been steady for the last month but increased a whopping $660 in the last five years.   That’s more than half of its value in that time period. 

Whether it will see increases and further gains depends on a great number of factors, most of which are unforeseeable.  But if we know anything from the past, it’s that gold will hold its value through market ups and downs.  And it’s something tangible: a hedge against the worries of inflation and time.

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