If you keep tabs on the gold market you are aware of just how volatile the market has been lately. After a steady climb from $252 to $1900 over a 10-year period gold is suddenly back in $1200 territory thanks to a series of crashes in April, June and the late autumn of 2013. However, gold is not the only investment suffering from bipolar disorder.
Oil prices started the year around $112 per barrel before falling 12% during the middle of the year. Oil has since rebounded and prices are virtually identical to those of one year ago.
According to Google Finance the Dow was 6.627 on March 6, 2009. Since that time, the Dow has increased by almost 140%. Before that the Dow fell by more than 40% in a spectacular fall that started in October 2007.
Interest rates for new homes fell below 3.4% in what is often called the “aftermath” of the housing crisis (which is still very much in play. Since May of this year rates are up more than 1/3 to 4.5%-4.7% in anticipation of the Federal Reserve raising rates at the core level.
The digital currency Bitcoin went from $14 in January to $238 in April before falling to $84 that same month. Since the April crash Bitcoins are up almost 1400%. Some believe that Bitcoin is the currency of the future while others believe it is nothing more than a tool designed for the black market. Some have even compared the rise in Bitcoin values to the “tulip mania” that swept the Dutch in 1637.
The Fed’s questionable policies have undoubtedly had an effect on our financial markets, though the effect is not exactly what our lawmakers had intended when they came up with the idea to keep interest rates low and implement quantitative easing. It seems as though no investment really knows its true value, but just as oil always separates from water and the cream always rises to the top it is inevitable that physical investments like gold will eventually distinguish themselves from paper-based, debt-laden investment vehicles.