, IncAnalyzing current gold prices is an important factor in determining whether the present price trend continues to have legs. Understanding the factors, both past and present, is an important part of successful investing. Learning to interpret current conditions and prices makes predicting future movements possible.
The first factor in evaluating gold prices is to understand the current price. Although gold has set its all-time high, the price is still in line with traditional pricing. With the current price hovering between $1,100 and $1,200 per ounce, it has not increased like other commodities over the same period. Since 1980, the price of gold has risen less than 50%, while the stocks on the Dow Jones Industrial Average are up nearly 700% during the same time.
If the actual price of gold increased at a conservative rate, the inflation adjusted price has actually decreased. Calculating inflation increases with the 1980 gold price of $873 per ounce would create a current price of $2,200 per ounce. Because of this, analyzing current gold prices against past prices can help keep its level in the proper perspective.
Finally, analyzing current gold prices requires an inspection of the current variables affecting the price. Gold is traditionally affected by inflation in an inverse relationship with the US dollar. As inflation rises, the value of the dollar falls, making gold more valuable. The global economic crisis continues to be unstable, providing an environment for sustained price increases.
By analyzing current gold prices against its past performance and current potential, investors are able to more accurately predict its movements. As 2010 begins, both scenarios indicate that the opinions of the experts have merit, meaning that prices could continue to climb well into the new year.
Michael W. Truman
Senior Staff Writer - GoldPrice.net
