A rise in the price of gold may be a sign that the economy is struggling. As a result, in times of crisis or inflation, many investors turn to gold to protect their capital. The value of gold derives from its scarcity as a commodity, as well as from its long history as a stable medium of exchange. The price of gold tends to rise during economic uncertainty and when inflation is high.
Despite President Roosevelt setting the price of gold in the 1930s, the shares of Homestake Mining, the largest gold producer in the United States at the time, rose more than 100%. If farmers get a low-yield crop after a bad monsoon season, their collective failure to buy gold affects gold investments across the country. The first is the VanEck Vectors Gold Miners ETF, known as GDX, a security that tracks the overall performance of gold mining companies. In this case, investors will most likely forgo gold as interest rates on loans rise, as they would get a higher guaranteed return compared to gold.