Thursday, February 21, 2013
Tweet[IWS] BLS: GOLD PRICES DURING AND AFTER THE GREAT RECESSION [20 February 2013]
IWS Documented News Service
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Institute for Workplace Studies----------------- Professor Samuel B. Bacharach
School of Industrial & Labor Relations-------- Director, Institute for Workplace Studies
Cornell University
16 East 34th Street, 4th floor---------------------- Stuart Basefsky
New York, NY 10016 -------------------------------Director, IWS News Bureau
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Beyond the Numbers, February 2013, Vol. 2, No. 4
PRICES & SPENDING
GOLD PRICES DURING AND AFTER THE GREAT RECESSION [20 February 2013]
http://www.bls.gov/opub/btn/volume-2/gold-prices-during-and-after-the-great-recession.htm
[excerpt]
Beyond its artistic and utilitarian uses, gold is used as a vehicle for monetary exchange through the issuance of gold coins and bars. (The former gold standard was established as a monetary system in which the standard economic unit of account was a fixed weight of gold.) Even though the United States transitioned to a system of fiat money (deriving its value from regulation) in the early 1970s, many investors continue to use gold as an investment to hedge against inflation, currency weakness, and other economic disruptions. Federal Reserve Chairman Ben Bernanke is of the opinion that gold prices are influenced by many factors. In 2011 he said, “Well, I pay attention to the price of gold, but I think it reflects a lot of things. It reflects global uncertainties. The reason people hold gold is as a protection against what we call tail risk, really, really bad outcomes. And to the extent that the last few years have made people more worried about the potential of a major crisis, then they have gold as a protection.”1
Price movements
Between 2008 and 2012, the value of gold increased dramatically, as is evidenced by the 101.1-percent surge in the Producer Price Index (PPI) for gold.2 As Chairman Bernanke stated, gold prices can act as an indicator of the health of the economy. A rise in the price of gold may be a signal that the economy is struggling. As a result, in times of either a crisis or inflation, many investors turn to gold to protect their principal. By contrast, in times of economic stability, investors are more likely to turn to more speculative investments, such as stocks, bonds, and real estate. During these times, the price for gold often declines.
AND MUCH MORE…including CHARTS & TABLES….
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