Gold has always been a valuable, alluring precious metal sought after and admired throughout the history of human culture. In the U.S., the dollar had been backed by gold until 1971 when Nixon switched over to fiat currency, or a currency where value is determined by the government’s regulatory laws rather than a tangible commodity. The price of gold has been steadily rising since then, but the last decade and the last year especially have witnessed a significant spike in the price of gold worldwide.
The Past 10 Years
For the last 10 years, gold has seen a steady increase in its price per ounce. It has been a bull market for gold since 2001, fueled by the economic growth of China, Russia, Brazil and India. The booming development of these countries and the weakening of the U.S. dollar have created a strong demand for gold, as these countries are trying to solidify their own reserves of wealth and move away from dependency on Western currency. Gold has become an “anchor of value” for these industrializing countries, and the ripple has been felt worldwide. Other factors that have influenced the past decade’s increase in gold demand are the 2008 economic crisis, after which central banks begun increasing their gold reserves. A decrease in mining production worldwide combined with this higher demand has also contributed to the rising price of gold.
The Past 12 Months
The last 12 months of gold prices have seen the price of gold per ounce skyrocket to unprecedented highs. During 2011, the price of gold fluctuated between $1,400 and $1,900 an ounce, reaching the historical all-time high of $1,923 in August 2011. By comparison, the price of gold per ounce hovered around a fairly stable $300 in 2003, about the same as it was in 1990. This past year has been a significant year for gold, and some gold stock analysts predict that 2012 will see gold hit the $2,000 per ounce mark. So far, the first third of 2012 has seen a trading range between $1,600 and $1,800.
Here’s a chart of the last 12 months of Gold Prices: