Thursday, March 13, 2008

Gold: $1000 an ounce?

Gold:$1000 an ounce? Even though people who bought Krugerands when gold was 300 to 400 dollars an ounce might be happy, I think it is more realistic to say that the falling dollar has more to do with the price of Gold than any other single factor. If I factor in the approximate 25% drop in the dollars value in the last 5 years against the euro, gold would actually be about $750 and ounce which I believe might be more realistic way to look at the price of gold. The same is true with the price of oil in dollars. My wife was reminding me that the British pound sterling was about $2.50 in the 1970s during one of our last recessions and since it is around $2.00 right now it reminds her of the 1970s and early 1980s in its price against the dollar. So many recession factors of the late 1970s and early 1980s are similar to now.

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