I've noticed that the ounce of gold lost a third of its value starting at $1700 to $1200 during 2013 and I would like to understand what caused such thing, if possible.
closed as off-topic by ChrisInEdmonton, Chris W. Rea, Dheer, Grade 'Eh' Bacon, Pete B. Jan 4 '17 at 19:10
This question appears to be off-topic. The users who voted to close gave this specific reason:
- "Questions on economics are off-topic unless they relate directly to personal finance." – Dheer, Grade 'Eh' Bacon, Pete B.
Gold is useful, but the total industrial demand for it isn't that big. The primary use is as bullion or high caret jewelry as a store of value. People tend to purchase it when they are uncertain about the future or are worried about currency debasement. When anxiety and uncertainty drop, not as much is purchased. It doesn't earn any interest and there are costs of storage, so there is a certain amount of disincentive to hold too much of it.
I don't look on the price changes as "it lost value", but more as "it got bid up over the equilibrium price and has now returned towards the mean".
From the previous peak in 1980 to the price bottom in 2001, gold had 85% less purchasing power as measured in McDonalds hamburgers. (A standard commodity with lots of price data.) That's a lot of purchasing power to lose.