Gold cost

Why has the cost of gold been on the up swing?

The answer is not supply... high prices like these make it much easier to make a profit from a mine justifying the mining of more difficult and expensive plots... also high demand is only part of the answer. The real question is why is there such high demand. Most people are currently pointing to world instability and are looking at gold, a commodity with inherent value, to protect them from a currency slide caused by political instability and/or inflation. Also, inflation itself has a direct effect, and while most aren't attributing a substantial portion of the price increase to a decreased buying power in money, I personally suspect that it's a major culprit.

2nd. opinion:

The price of gold is now rising because mining companies do not find it profitable to mine for gold as the amount that come out the mines are not as much as they used to get.

When companies mine for gold, they also mine other materials, but now targeting gold is less profitable, so they have to target a more profitable mineral, and whatever gold they get is a bonus, therefor less gold is coming out the mine, so the less gold available, the higher the price goes.

3rd. opinion:

Gold is correlated with level of war, globally. It is also correlated with productivity and national indebtedness. It is an alternate currency. Likewise, it is inversely related to central bank gold stocks. High gold stocks risk sales by the central banks, low gold stocks may trigger buying.

Gold prices have risen, imho, because the dollar, yen and euro are overvalued, but there is no alternate currency of sufficient strength, to invest in.

The current American administration is borrowing extraordinary sums. Based upon calculations by the Treasury, before the last tax cut and the Medicare drug benefit, on a present value basis, the United States is insolvent in the absence of material cuts in services and increases in taxation beyond those scheduled.

Jagadeesh Gokhale has provided a good academic discussion on this and seems to be leading the academic community in measuring the problem. If you are academically inclined, you may want to read http://www.aei.org/doclib/20030508_gokha...