This is a highly emotional issue for some folks, who say that everybody should hold 10 percent of their financial assets in gold. They also believe that U.S. financial policy has gone to hell in a handbasket ever since paper currency stopped being backed by hard gold assets.
Gold is probably more like the canary in the mineshaft. It's an indicator of how people are feeling about the economy or security. Gold prices are volatile, so focusing on one day's trading isn't insightful. But long-term, it may be useful as an indicator of how investors feel about the reliability of other instruments such as cash, bonds or stocks.
To be sure, gold prices have risen sharply, both recently and in the last 10 years. Look at
these charts from Kitco, a precious metals retailer:
Even adjusted for inflation, the performance is impressive. Gold's 10-year low of about $253 an ounce would be about $305 now. So over about 10 years, the value of gold has tripled in real dollars. But
according to a Time magazine article, even that doesn't match gold's price in 1980: $2,100 an ounce in today's dollars.
Gold is rare -- really rare. The Los Alamos National Laboratory states that
all the gold in the world, so far refined, could be placed in a single cube 60 feet on a side.
Uses for GoldOther than jewelry and gold coins, what else is gold used for? Dentists use gold because the metal is stable, does not cause irritation and does not tarnish.
Here are some more uses listed on the
Barrick Gold Corp. Web site:- Focused lasers: With gold-plated interiors, lasers give off a more focused beam, helping save the lives of heart patients suffering from once-inoperable heart conditions and tumors.
- Accurate thermometers: Gold-plated thermometers give accurate body temperatures of newborns and unconscious patients.
- Genetic research: Researchers place gold on DNA strands to study the hybrid genetic material of cells.
- In cars, airbags depend on gold-coated contacts and electronic sensors for reliability, saving hundreds of thousands of lives in the past 15 years.
- In the air, commercial airplanes rely on gold-bonded compressor vanes to cool their turbines from exhaust that can reach up to 1150 degrees Fahrenheit.
- Below ground, miners rely on gold-activated sensors to warn of low levels of oxygen and trigger an automatic replenishment in seconds.
- In geo-stationary weather satellites, sheets of gold-coated Mylar deflect heat that would otherwise degrade their performance.
- Electronics and telecommunications equipment count on gold for reliable performance, since gold does not corrode in normal atmospheric conditions.
- Trading in securities and other financial instruments depends on gold for static-free transmissions worth billions of dollars.
StatsSheet.com adds:
What is gold used for in electronics and telecommunications? It serves as a versatile and safe conductor for electricity and as a semiconductor for computers and other state-of-the-art equipment. Many areas that use gold are in the places where there is constant or frequent plugging and unplugging. Contacts are coated with the precious metal to ensure that there is little possibility of corrosion and reliable signals.
Other uses of gold are as essential parts for lasers, as an agent to cure Lagophthalmus (a condition where the eye lids do not close fully), as wiring for television and VCRs and much more. Technology has helped to broaden what is gold used for, but the most common use for gold is still as jewelry.
Gold has a poor long-term track record as an investment....
