The value of gold as it is often talked about, is an ironic number. Gold is trading at above $1900 an ounce on the market. Notice I said “on the market”, not “in stores.” Gold, like other metals and commodities, are also traded like stocks on the stock market. When the economic outlook is bad people (more specifically traders) sell their stock in companies and flood into “safe” stocks. Safe stocks typically include stable governments’ bonds and commodities like Gold, Silver, and Platinum. The thought is that these “stocks” won’t lose value, and people will flood to them seeking their safety. (it’s worth noting that for all the crap the US treasury bond gets, even after it was downgraded traders still RUSHED to buy them).
When you see the price of gold balloon you have all the day traders selling stocks in businesses and buying stocks in gold because they know its going to go up, and then when it begins to decline they will sell to turn a huge profit (based entirely upon the fear of the common man).
The biggest irony that people don’t seem to understand with this “gold costs $1900 an ounce” issue… is that when you buy an ounce of gold and help fuel that price, you’re not going to get an ounce of gold… You’re going to get a piece of paper (or an online statement more likely) that says you own X ounces of gold. Your likely reason for buying gold was the fear that the US dollar will collapse, and if your worst fear is realized… you won’t have any gold, just a useless piece of paper telling you you own X ounces of gold. And if you were smart enough to buy an actual ounce of gold based on your economic fears, it wouldn’t contribute to the increase in price at all.