Current price of Gold

 

 

Why do gold prices go up and down so much?

 

When you see gold prices going up and down like a yoyo, that generally means there is a lot of instability in the economy of one or more countries.

 

As I write this, it is late April, 2009. This is crazy time. The world is in the deepest recession since the great depression of the 1930’s.

 

According to the IMF, over $4.2 trillion have been lost to the world’s economies. Crazy times indeed.

 

When people, companies and even nations lose confidence in the stock markets, many will turn to gold as a safe haven for part of their wealth.

 

As demand for gold goes up, so does the price.

 

But then the next day a news item or announcement expresses optimism about the ability of the world’s economies to bounce back, and those same people and institutions will sell some of their gold and put it back into stocks.

 

Why the flip flop? Because while gold may be safe, stocks generally provide a better opportunity to make large, short-term gains.

 

When investors feel scared, they put money into gold. When they feel safe and greedy, they invest in stocks.

 

This is a necessary simplification of what is an enormously complex interaction between multiple factors, but the general idea holds true. You can see it for yourself. When doom and gloom hits CNN, watch the price of gold inch up. And vice versa.

 

As always, our advice when buying gold as an asset is not to panic. Hold steady. Don’t buy at the high points. Just wait for some good news on CNN and buy your gold when the prices fall again.

 

In other words, stick to buying gold bullion coins.

 

You can buy gold bullion coins and bars online at GovMint.com