Research Mountain / Seeking Alpha
Gold has been one of the most sought after minerals for centuries. From the ancient pyramids, where gold was used to ornate buildings and thrones to today’s rapidly growing jewelry markets, gold has held its own over time. The Gold Standard, which began in 1900 and ended in 1971 created a benchmark for world currency because of its consistent values. While world monetary systems no longer rely on the value of gold, its attraction and intrinsic value has not changed or diminished.
Gold pricing is tied to many economic factors. These include inflation, geopolitical environments, and political instability even at the regional level. In times of crisis demand for gold rises as it is still considered a default currency in many world markets. Paper currency is only as valuable as the government that backs the currency. Gold holds value regardless of political stability and this can impact demand significantly. Political instability can also impact production in regions where the mines are located.