Published by Mark
Not two months ago, I wrote a blog called “It’s Not Good When Gold Glitters”, explaining that, at times when investors are worried about stocks, gold prices tend to rise. When investors worry about inflation (meaning their dollars are losing buying power), gold prices rise. Gold is considered a “safe haven”, I explained, in times of uncertainty. At the time I was writing that article, gold prices were at $890 a Troy ounce.
Then, just a couple of weeks ago, the price of gold literally went through the roof, hitting a $1000 per ounce record high. Just as I had explained, this was the result of investors’ fear of a weakening U.S. dollar and of coming inflation.
Now, here we are just a couple of weeks after the big upward swing in gold, and the picture has changed. With stocks having bounced up quite a bit and the price of oil having come down a bit, we’re getting some bad news about gold (remember, that’s good news for stocks and the economy!). Gold prices took a dive back to the $900-an-ounce neighborhood.
A number of factors are all working at the same time to cause these price swings. The Federal Reserve lowered interest rates, and, contrary to expectations, the dollar gained in value against the yen, stock prices rose, and the commodity prices of wheat, sugar, corn, copper, and platinum all fell.
As a bankruptcy attorney in Indiana, I understand how all these price movements around the world come home to roost, affecting my family and friends as well as all my Indiana bankruptcy clients. That’s the reason I try to stay current on economic news. While, as I’ve often repeated, I’m no economics guru, I deal with financial matters day in and day out, counseling individual debtors and small business owners struggling to survive and to make sense of all these ups and downs.
A humorist once remarked about our weather here, saying “If you don’t like the weather in Indiana, don’t worry. Just wait a day or two and it will change!” Sometimes I think the same thing can be said of the economic climate….