When you look at the price of gold over the last several decades, you’ll notice it has ascended strongly. In 1971 gold was pegged at $35/ounce. Today, it’s over $800+/ounce.
What happened?
In 1971, the U.S. abandoned the Gold standard. This began the demise of the dollar.
As the credit crises and subsequent meltdown of the financial sector continues, there will be upward price pressure on gold, as investors go for more tangible investments. Perhaps in the future we will re-value our dollar and peg it to gold again?
For more information on the history of money in the U.S. see: History of U.S. Paper Money.
