Bear Stearns Crumbles and What's up with Gold?

As of the close of business on Friday last week, the price of gold had risen to a record high $1015 per ounce! A look at the chart of this commodities 5 year history and you might wish you bought some bullion bricks for yourself back then. Gold has more than tripled in value in the past 60 months and it may be all by accident. 

It seems that since banks quit using gold to back up their monetary supply, the uses and demand for gold has greatly diminished. It’s not used all that much for jewelry either as other metals such as silver and platinum have pushed their way to the front of the line in terms of demand. One reason for this “run” on gold has less to do with a demand for it’s use and more to do with investor’s fears of the financial markets and the difficulties of our economy.  

Investors are shifting their attentions to more tangible and fungible commodities so that as the “Bear Stearns” of Wall Street stumble and fumble, they can feel a little safer in the fact that their investments are more secure than paper stocks.   They have a true asset that won’t “tarnish” their portfolios as our nation continues to inch closer to recession.  After all the government may not always step in and bail our companies like Bear Stearns with 30 Billion Dollars.

Demand for this precious metal is on the rise, but seemingly only to give investors piece of mind and something to store under their mattress and not for any great plan or use. I am not sure how long this run will continue and personally feel that profit taking will occur as soon as prices begin to level off or drop.

What do you think about the current market turmoil and gold in general? Does it have a solid place in your financial planning? What about the Bear Stearns bail out, should our government be in that business?