Thursday, September 23, 2010
Gold Hits New Records
Inflation-wary investors bid gold prices up near $1,300 an ounce. Gold prices gained $4.20 settling on a record of $1,296.30 an ounce, building on gains it made after the Federal Reserve announced Tuesday it might take further steps to stimulate the economy. The article says investors buy gold when they want to protect themselves against inflation and that it appears the Fed’s statement stoked fears the dollar’s value will continue to fall. Gold prices have nearly doubled since 2008 when an economic panic shook global credit markets and central banks responded by flooding currency markets.
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It is interesting to see where people are putting their money to protect it from inflation. In class we discussed expected inflation and how that impacts people's decisions today. While the dollar value has seen a drop I don't think we've experienced as much inflation as originally thought. However, because people are expecting high inflation they react before the expected happens. It will be interesting to see if the simple expectation of high inflation will make inflation happen.
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