Most financial analysts have correctly observed that the price of gold has a direct correlation to the value of our money. Ever since the United States removed the gold standard, the precious metal has ceased to anchor the value of the dollar, and instead has become a safe haven asset for those who don’t trust a fiat currency that is backed by nothing. Thus, even though the United States has been off the gold standard for decades, the demand for gold still effects the price of the dollar, and vice-versa. While these numbers don’t always perfectly correlate, it’s safe to assume that when demand for the dollar is high, people aren’t going to view their gold as a safe haven anymore. Many of these investors feel that the danger has passed, and good times are ahead for our economy. To some extant this is true, since we’ve seen not only the stock market price of gold plummet and stabilize, but the physical demand for gold appears to have dropped as well.
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