Why do gold prices continue to rise, even when the stock market is dropping?

Historically, the price of gold has dropped when the stock market took a plunge.

But these are not the usual historical times. With economic uncertainty, high unemployment rates and a swelling national deficit, even the average investor is seeing that something’s different here. More than that, even people who don’t usually invest their money are starting to sense a need for building as much financial security as they possibly can. The price of gold can be looked at as an index of our confidence in our economy. With the dollar continuing to lose value, and unstable political conditions throughout most of the world, some advisors say that investing in gold could be one of the safest precautions to take.

A slow-moving real estate market and decreasing returns on real estate also tend to drive up the price of gold. Given the recent real estate crunch and the unstable economic and political conditions, it’s no surprise that people are getting concerned.

But what happens when there’s good news for the stock market and the economy? Generally, when that happens, gold prices drop. And for the people who bought gold, that means they take a loss…or does it?

There are several different perspectives on this. Some analysts say that gold is still a good prospect, and that it offers more safety than do traditional investments. Others say that the prices are so high right now, it doesn’t make sense to invest with hopes of making any significant gains. In other words, if a person is looking to make money, as opposed to just minimizing their losses, buying at such a high price may not be the way to go…unless gold prices skyrocket. Then, there’s the fear factor–if fear decreases and traditional investments start looking more desirable, that could take the fuel out of the trend toward buying precious metal.

Whatever your choice, before you buy or sell gold, get advice from a financial expert. Educate yourself, understand the potential risks, and make decisions based on facts–not fear.