The Price of Gold and its Five Year History

Historically speaking gold has been an excellent method of preserving your wealth especially when your national currency was on a decline, since the price of gold is always increasing. If you have investments in a currency which is depreciating then allocating part of your assets in gold serves as an excellent insurance policy. Gold has a history of highs and lows but the average trend of gold has always been on the upside.

The Value of Gold from October 06 to April of 08

Gold prices in October of 2006 were quite stable at $600, only fluctuations in the next few months were just of a few dollars such as when the prices dipped to around $560 an ounce next month but because the economy was pretty stable people were not rushing to purchase gold. In major gold consuming countries such as India and China gold was still in high demand owing to cultural factors but apart from that there was no real rush to stock up on gold. The real gold price wars began just after the dollar began to lose value in March of 2008. The crashing of the credit market in America along with the dwindling dollar was soon followed by gold peaking at around $1000 an ounce. The reason for the sharp increase for demand can be attributed to the fact that people wanted to invest in something which was stable.

The Next Two Years – October 2010

The next two years saw the prices of gold shoot up sharply to reach a high of $1400 an ounce in October of 2010. The demand for gold shot up from sharply after it dipped slightly in October of 2008 to $600 an ounce. As a matter of fact the price dip in October of 2008 was the lowest since October of 2006 and was partly because the purchase increase has declined sharply for some odd reason. Some people attribute it to prevailing economic conditions which stabilized but some experts point out that economics alone was and is not driving the price of gold but rather the tech sector which is the largest consumer of gold.

After the dip of October 2006 to $600 an ounce, gold shot up the next month to around $700, that following month it shot up to $800 without any sign of gold prices declining. Experts cite the rise after 2006 as being unstoppable since it continued to rise right up and beyond October 2010.

November 2010 to October 2011

Current prices of gold i.e. October 2011 are at $1600 an ounce which is a reduction of $200 since April of 2011. The only lowest point for gold between November 2010 and October of 2011 has been $1100 an ounce. If you really looked at the average increase in gold prices in the past five years it’s not hard to note that it has increased by over 100% from just $600 an ounce back in 2006 to around $1400 in 2011 which means that gold is certainly on the way up regardless of how currencies decline.