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Gold and the Economy

What Is Gold's Impact on the U.S. Economy?


Gold's impact on the economy waxes and wanes, depending on how safe other investments are. In fact, you can tell how healthy the economy is from the price of gold. When the U.S was on the gold standard, the precious metal had an even great importance. Find out whether gold is a good investment, where to buy gold, and when is a good time to buy gold.

1. Gold Prices

Gold prices hit its all-time high of $1,895 an ounce in September 2011. Investors were worried about both the U.S. debt crisis and the eurozone crisis. It seemed neither the dollar nor the euro were safe investments. When other investments look too risky, gold always looks like a good hedge. Find out the recent history of gold prices, and what fluctuations in the price of gold tells you about the helath of the U.S. economy.

2. The Gold Standard

The gold standard is how countries tie the value of their currency to gold. Basically, they are willing to redeem that currency for its value in gold. This allowed lightweight paper currency to be used for trade, instead of heavy gold bullion. In addition to making purses, and pockets, lighter, the gold standard allowed global trade. Find out how this worked, and why a return to the gold standard would adversely affect the US economy.

3. History of the Gold Standard

Gold was first used as a standard in 643 B.C., when it was first used to create coinage. Wealth was defined strictly by the amount of gold you had. Find out how the use of gold as money evolved, from coins, to paper redeemable by coins, to a concept that was only loosely tied to its value in gold. Follow the gold standard's evolution, through its impact on the Great Depression, how it was modified after World War II, and to its eventual dissolution in the 1970s.

4. Should the U.S. Return to a Gold Standard?

During the financial crisis in 2008, many longed for a return to the gold standard. It seemed that money had lost all relation to anything concrete. However, the very forces that pried us away from the gold standard also meant that a return would prompt massive deflation that would probably throw the global economy back into another depression.

5. Why Ron Paul Advocates a Return to the Gold Standard

Representative Ron Paul (R-Texas) would like a return to the gold standard, and using gold and silver as the basis of money. If Dr. Paul is elected President, this would be one of his first actions. His goal is to force the government to cut spending, lower the budget deficit and debt, and restore fiscal responsibility. Find out what else would happen if this veteran legislator becomes our next President.

6. Why Invest in Gold

People invest in gold to offset stock market declines, hedge against inflation and counteract a declining dollar.That is why gold is often considered a safe haven investment. But is it really? Research from Trinity College shows that gold should be included in a well-diversified portfolio. It does protect your investments as a hedge after a stock market crash. However, this protection is short-lived. Is it worth holding gold for that reason? How much gold is enough? Does it make sense to buy gold when the price is going up? Find out what the research says, and how you can use gold to improve your financial return.

7. What You Should Know Before Buying Gold

When the price of gold shoots up, everyone wonders if they should buy it. Are you a good candidate for buying gold? Learn what kind of investor is most likely to profit from buying gold. Find out why, the higher the price, the riskier this commodity is. Understand at what point a gold bubble will become a gold bust.

8. History of Gold

Before gold was used as coinage, its value was recognized. Gold jewelry is buried in the Tomb of Djer, king of the First Egyptian Dynasty. Gold's beauty, lustre and malleability made it perfect for many uses. In fact, the Egyptians became masters at the art of beating gold into leaf. Find out how gold was used throughout history.
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