When gold was disconnected from the US Dollar during the seventies, its detractors forecast that it would not be worth any more than other precious metals and certainly much less than 35 USD per ounce. Yet it is the opposite effect that has occurred.

When gold is compared to the US dollar, which has lost much of its value over the last thirty years, the price of over 1200 USD per ounce of November 2009 is only a third to a half of its medium to long term potential.

When we compare it to other precious metals, we see that there is also something here that confirms that gold is not just another precious raw material. Over the millennia, one unit of gold has been equivalent to between 9 and 19 units of silver. This value is certainly correct if we consider their respective rarities. But nowadays, you need to exchange 60 to 80 units of silver for the same unit of gold. Silver is no longer a coin, nor is gold (except….) but neither is it considered a safe investment. Who remembers the bi-metal period when the value of coins was based on the values of both gold and silver?

Things are even worse for platinum. Platinum was thought to be the most expensive quoted metal for many years but now has the same price as gold. Why has it fallen out of favour? Platinum is mainly used to decontaminate in catalytic converters and its value is mainly linked to the automobile industry where it is used as a credible decontaminant (something that is now being questioned). In short, the situation with platinum is worse than that of silver. It is rare but neither a currency nor a safe investment and is simply a rare industrial product which the manufacturers would like to replace as soon as possible by something less expensive with fewer negative effects. Platinum is certainly not in the same league as gold.

Tags: DOLLAR, Gold, Money

This entry was posted on Wednesday, December 23rd, 2009 at 6:08 pm and is filed under Economy, Gold, Money. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.