Gold has once been used as a monetary item and did not have a fixed price. A gold standard was made after the war of World War II, making the the gold price fixed at $35 per troy ounce. This was no longer the system when the US stopped converting the US dollar into gold, which was in 1971.
The gold price reach above $1000 in March 2008 which the actual value was below $599 peak in 1981. Gold price fell after the March 2008 rise, decreasing to $712.30 per ounce in US dollars in the month of November. In February of 2009, it then rose again breaking the $1000 mark but once again fell in the late Quarter. The current gold price peaks for 2009 are due to inflation acceleration.
Supply and demand are two of the things that drive the price of gold. The gold mining still exists in which plays an important roll when it comes to the pricing. At the end of 2006, it was estimated that all the gold ever mined totaled 158,000 tonnes.
The price of gold is determined by changes in sentiment instead of annual production. About 2,000 tonnes goes into the production of jewelry and/or dental production, and around 500 tonnes goes to investors of retail and exchange traded gold funds. This makes the annual demand for gold to be around 1000 tonnes in excess over mine production.
Another factor that plays a role in the gold price is central banks and the International Monetary Fund. Central banks and organizations held 19% of all above ground ground gold in the end of 2004. The key sellers of gold have been European central banks, that include the Bank of England and the Swiss National Bank. In 2005, Russia had expressed interest in growing their gold reserves, where most banks don't express this.
Many people were more interested in carrying paper notes or dollars when dollars were fully convertible into gold. During the Great Depression of the 1930's, people were afraid of bank failure, hence a bank run may have occurred. This is when President Roosevelt outlawed the ownership of gold by any US citizen.
Many people sought gold as a solid asset in purchasing food or transportation when there were crisis in the economy and fear in losing their assets. This is when gold price rose in demand.
You can learn about gold and its worth and how it can benefit you by going to this link:
Gold Price. A wealth of information can be found here that will help aid you in the right decision on buying and selling gold.
If you need a jumpstart to your long term investments and want to secure financial freedom then this is your Call To Action. Leave the rest behind and never look back.
Article Source: http://EzineArticles.com/?expert=Sitaram_Poudyal
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