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History of the Price of Gold
Why it is Important to You
Gold is a soft, yellow metal. Why, though, is it so valuable?
Beyond being desired for its beauty and many uses, gold was historically used to create coins. Eventually, gold was replaced by paper money and other metals – but they were originally created as a receipt for gold. In other words, the bills in your wallet actually represent a certain amount of gold.
The value of gold is currently in the neighborhood of $900 an ounce, but it has fluctuated greatly over the years – depending on its investment value on Wall Street. This has not always been the case.
The U.S. government fixed the price of gold so that, until 1934, one ounce equaled $20.67. This changed when the dollar was devalued to equal $35 per ounce of gold.
Eventually, a system was created so that the $35 per ounce value was maintained, but gold was able to be bought and sold on the private market – allowing its price to change. Finally, in 1975, gold became an entirely free market investment.
Since 1975, the price of gold has varied from $200 an ounce to more than $1,000 an ounce. While the $850 an ounce price that it reached in 1980 is no longer a record, it is easily the highest amount when adjusting for inflation. At roughly $2,176 an ounce by today’s standards, we have never since come close to the price levels of gold in 1980.
After that peak in 1980, the price of gold mostly stayed between $250 and $500 an ounce until 2006. Since September 2007, the price of gold has not dropped below $700 an ounce or risen above the $1,023.50 per ounce record that was set on March 17, 2008.
Gold pierced the $1,000 an ounce barrier for one day early in 2009 and has since remained largely in the $900 – $950 range through the first quarter. It is largely speculated that the price of gold will continue to rise as economic times worsen. Historically, the value of gold rises as the dollar weakens.
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