Friday, March 29, 2013

Gold prices during and after the Great Recession

Gold, a highly valuable precious metal, has many practical uses that span multiple industries. Historically, one of the primary uses of gold has been to make ornamental objects, such as jewelry. Malleability is one of gold’s special properties, allowing it to be hammered into sheets, drawn into wires, and cast into different shapes.

Between 2008 and 2012, the value of gold increased dramatically, as is evidenced by the 101.1-percent surge in the Producer Price Index (PPI) for gold.2 As Chairman Bernanke stated, gold prices can act as an indicator of the health of the economy. A rise in the price of gold may be a signal that the economy is struggling. As a result, in times of either a crisis or inflation, many investors turn to gold to protect their principal. By contrast, in times of economic stability, investors are more likely to turn to more speculative investments, such as stocks, bonds, and real estate. During these times, the price for gold often declines. (See chart).



To read more about the price trends, goods and industries surrounding the price of gold, see the full report.

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