Economy in light of the rise and fall in the price of gold

  • February 10, 2021

Gold is considered to last forever. Therefore, it has reached an important position in the world economy. According to figures collected after surveys, the price of gold is an important factor in the regulation of the world trade. During the financial crisis, it is controlled that the price of gold is rising. In some cases, the rise in the price of gold can be wrong and illusory. 

The rise and fall in gold prices is traditionally seen as a mirror of current inflationary pressures. This is not always correct; sometimes it can turn out to be a case of wrong cause and effect. It would be too early to draw conclusions. The postulates of long-wave economic theory, which have established themselves as invaluable in looking clearly at historical trends, reveal that gold has fared better on two points. You may be interested to know that these have been declared low in the long-term business cycle at the peak of inflation in the final stages of the deflationary cycle. 

If we relate it to the current situation, we are faced with the second situation, which is the deflation cycle. At the moment, the price of gold is almost skyrocketing. According to trade gurus, it would be wise to invest in gold before the price of gold rises to a level far beyond the reach of the common man. 

The most important factor and in fact the decisive factor that has a major impact on the price of gold is the weakening of the US dollar. There is a popular thought among people that the price of gold would rise when the dollar fell. The alarm that the US dollar will continue to weaken has led to an increase in the number of people investing in gold. With a direct proportionality ratio, it has led to an increase in the price of gold. In line with the rise in oil prices, there has been an increase in inflationary pressures worldwide. 

Inflation is considered to be wear and tear on the value of money. For fear of this, people bend and move their money to relatively stable real assets such as gold, which in turn causes gold prices to rise. This may sound new to you, but the threat of terrorist attacks also plays a crucial role in changing the price of gold. Investors tend to spread in good store value personal property like gold. The most recent example in support of this theory is the attack that took place in the United States. This attack on the United States may have paralyzed the economy, resulting in a reduction in the price of stocks and real estate, it did not have a drastic impact on the price of gold. Therefore, people all over the world consider it one of the safest options to invest.