Many people watch the price of gold as an indicator of inflation. And I believe Alan Greenspan did too when he was FED chairman. At any rate, gold is thought to be an inflation hedge, and TV ads have been peddling it for years on that basis.
Currently, the price per ounce is $1,695.10, according to Kitco.com , after a choppy election month. And it's down from an all time high back in September, 2011, of around $1,900.
The last big spike in gold prices was in1980 with a peak at around $850. Applying the BLS inflation calculator, that would put an ounce of gold at $2,386 in today's dollars.
So that tells us that if gold really is an inflation indicator, inflation isn't as bad as it was back in the 80s when Paul Volker tightened the FED screws so much to crank down inflation that it sent bank CD rates to around 16%. And going to the BLS again we learn that the CPI in October of this year increased at an annual rate of a mere 2.2 percent.
Ben Berneke is less interested in inflation than the unemployment rate, and he's been priming the fiscal pump for years with little to show for it, because he can't offset the burdens Obama has placed on the economy. Rising wages would precede inflation, but as long as unemployment is high, wages won't rise. So the effect is that inflation is held in check by low levels of employment.
As for the price of gold, when market participants think the price will go up, they buy. When they think the price will go down, they sell. But something else was happening back in the late 70s and early 80s when the gold price peaked that time. There had been a revolution in Iran, and American hostages were being held by the Islamic radicals who took control. The nation was focused intently on developments, and a TV show, Nightline, was even created to cover it. It would be ironic if some situation developed with Iran or Islamic radicals elsewhere that drove the price of gold up again.