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The largest demand for gold is in jewelry and investments Gold is known as ametal that is easily used and has many industrial applications Since gold is so durable andluxurious many people invest in jewelry stocks and gold bonds Considering the fact thatgold is considered a world-wide valuable good many economies have gold reserves tohelp protect themselves in times of need Nevertheless factors of supply and demand havecontributed to the decrease of the price of gold which has reached an all time low since1978 This reduction has raised many concerns in the United States having them weigh thedifferent factors of the price supply and demand and consumption that may be affectingThe price change commands attention since gold serves to indicate price stabilityor inflation Although inflation is not as threatening in the United States because it ismore industrialized the bigger fear is facing deflation with our countries gold currencyGold averaged 294 dollars per ounce in 1998 when at one time the prices were in the mid400-500 per ounce Due to fact that gold prices have been so low Central Banks havethreatened to sell their gold inventories fearing that gold is no longer considered theultimate store of value Regardless prices have continued to fluctuate in both directionsthroughout the year but it is important to weigh the different variables that are having anThere are different factors associated with the supply and demand which havecaused prices to decrease First of all the record low prices in the past year has causedinvestors to participate less causing prices to be determined largely on golds own supplyand demand fundamentals and the economic environment The supply of gold declined byless than 2 during 1998 The price reduction started to impact the mine production byslowing the rate of manufacture growth by the end of 1998 When prices began toweaken this caused many mines to shut down leaving low grade ore in the ground Thisalone is effecting the mine output and the cost to produce
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