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 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 – depending on its investment value on Wall Street. 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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