Gold Prices During and After the Great Recession

Gold, a highly valuable precious metal, has many practical uses that span multiple industries. Historically, one of the primary uses of gold has been to make objects, such as jewelry. Malleability is one of gold’s special properties, allowing it to be hammered into sheets, drawn into wires, and cast into different shapes. In addition to jewelry, gold is used to manufacture many products that we use in our everyday lives, especially electronics. This is because gold is an efficient conductor of electricity, and electronic components made with gold tend to be very reliable. Televisions, cell phones, calculators, Global Positioning System (GPS) devices, and computers are examples of products produced with small amounts of gold. Gold is widely used in other areas, as well, such as the medical, aerospace, and glassmaking industries. Beyond its artistic and utilitarian uses, gold is used as a vehicle for monetary exchange through the issuance of gold coins and bars. (The former gold standard was established as a monetary system in which the standard economic unit of account was a fixed weight of gold.) Even though the United States transitioned to a system of fiat money (deriving its value from regulation) in the early 1970s, many investors continue to use gold as an investment to hedge against inflation, currency weakness, and other economic disruptions. Federal Reserve Chairman Ben Bernanke is of the opinion that gold prices are influenced by many factors. In 2011 he said, “Well, I pay attention to the price of gold, but I think it reflects a lot of things. It reflects global uncertainties. The reason people hold gold is as a protection against what we call tail risk, really, really bad outcomes. And to the extent that the last few years have made people more worried about the potential of a major crisis, then they have gold as a protection.

Improvements to the Producer Price Index measure: The Final-Demand-Intermediate-Demand System

[Excerpt] The release of January 2014 Producer Price Index (PPI) data marks the transition from the Stage of Processing (SOP) aggregation system to the Final Demand–Intermediate Demand (FD–ID) aggregation system. The transition to the FD– ID system is the culmination of a longstanding PPI objective to improve upon the SOP aggregation system by incorporating price data for services, construction, government purchases, and exports. In comparison to the SOP system, the FD-ID system more than doubles PPI coverage of the U.S. economy to over 75 percent of in-scope domestic production. This issue of Beyond the Numbers presents 2013 PPI data based on the new FD–ID system. The PPI estimates shown with this system represent the beginning of wider coverage by the index, to be continued in subsequent issues

Producer Inflation in 2014: Energy Prices Drop but Prices for Services Advance

The Producer Price Index (PPI) measures the average change over time in the selling prices received by domestic producers for their output. The PPI provides measures of final demand (price changes for goods, services, and construction sold to consumers, capital investment buyers, government, and export) and intermediate demand (price changes for goods, services, and construction sold to businesses, excluding capital investment goods, as inputs to production). This issue of Beyond the Numbers describes price changes in PPIs throughout 2014. Falling energy prices and rising services prices were some of the top movers in 2014

Producer Prices in 2015: Services Inflation Slows, Goods Prices Continue to Decrease

[Excerpt] The Producer Price Index (PPI) measures the average change over time in selling prices received by domestic producers for their output. The main PPI measure of inflation, the Final Demand- Intermediate Demand (FD-ID) System, measures final demand inflation (price changes for goods, services, and construction sold to consumers, capital investment, government, and export buyers) and intermediate demand inflation (price changes for goods, services, and construction sold to businesses as inputs to production, excluding sales of capital investment). This issue of Beyond the Numbers describes PPI price movements in 2015