In This Article
Subscribe to Finance Updates
Gold Hits a New High
by
findingDulcinea Staff
The price of gold reached $1,000 an ounce on Thursday, and the Dow Jones Industrial Average dropped 200 points during morning trading.
30-Second Summary
CNBC concluded that the spike in gold prices underscored “investors' nervousness about the economy and inflation and the weakness in the dollar.”
Gold is traditionally seen as a secure investment in times of economic uncertainty. These days, couples planning on marriage are rushing to buy their rings before prices go up further, according to the Los Angeles Daily News. "They are afraid that if they wait they'll end up paying more money," said a California jeweler.
Interestingly, according to Daniel Gross, who writes for Business Week and Slate, the rise in this precious metal began well before the mortgage crisis. Gold should have been falling back in 2006, he wrote, but instead was carried along by the rising tide in commodities prices.
Gold is traditionally seen as a secure investment in times of economic uncertainty. These days, couples planning on marriage are rushing to buy their rings before prices go up further, according to the Los Angeles Daily News. "They are afraid that if they wait they'll end up paying more money," said a California jeweler.
Interestingly, according to Daniel Gross, who writes for Business Week and Slate, the rise in this precious metal began well before the mortgage crisis. Gold should have been falling back in 2006, he wrote, but instead was carried along by the rising tide in commodities prices.
Headline Links: Gold hits $1,000 an ounce
Wall Street indices are down after gold hit $1,000 an ounce for the first time on March 13. The price signals a lack of investor confidence, as investments in precious metals are considered a safe bet in times of economic uncertainty.
Source: CNBC
Forbes details the many factors that have driven gold across the psychological barrier of $1,000 an ounce. The magazine reports that “many speculate that this price is far from the ceiling for the metal."
Source: Forbes
Background: The dynamics of gold pricing
Even before the major downturn of the economy seen last year, gold prices reached a 25-year high on April 10, 2006. The precious metal traded at $603 on the New York Mercantile Exchange. But while inflation was reined in and the stock markets remained stable, expansion of tiger economies such as India and China, the recovery of Japan and four years of steady economic growth kept hydrocarbons and agricultural futures prices high. Speculators then kept pace and pushed up gold prices.
Source: Slate
Richard Russell looked at the importance of investing in gold in his Dow Theory Letters column on Feb. 25: "OK, let's get back to what you and I can do about the current tenuous situation. I've suggested that my subscribers, own gold, cash and a paid-up home. Gold is for protection against today's galloping inflation.” Russell’s column is published by Monex, a precious metals dealer.
Source: Monex Precious Metals
On March 5, the International Herald Tribune reported that if gold was to climb to $1,000 an ounce, production was unlikely to increase. The Tribune interviewed Leon Esterhuizen of RBC Capital Markets in Johannesburg: "Pick a number, even at $1,200 or $2,000—even at those very high prices, the existing resource bases are getting depleted.”
Source: International Herald Tribune
Opinion & Analysis: Gold prices move up marriage, push back retirement
The Pundits blog on The Hill writes that lofty gold prices mark “a period of not just one economic bubble but several beyond our control.” The weak dollar, declining home prices and rising sales taxes are a sign of “the first recession since 1930 that was truly created by Wall Street. These problems have been fueled by speculators and investors in real estate or other forms of property,” writes the blog. This is likely to hobble baby boomers’ retirement plans.
Source: The Hill
Sherman Oaks, Calif., jewelry store manager Ron Tarin has seen a sharp rise in the number of couples buying wedding bands. While couples usually hold off on buying rings until just before the ceremony, "They are afraid that if they wait they'll end up paying more money," said Tarin. "When there is a disruption in economic and political circumstances, conventional investments like stocks suffer," said George Milling Stanley, a spokesperson for the World Gold Council. "But gold will often increase in value.”
Source: Los Angeles Daily News
Supporters of the gold standard will be vindicated. Writes The Economist, “Indeed, one of the main reasons why gold is priced in four digits is related to the problems of the dollar.” The magazine cites four reasons why the yellow metal is trading so high: fears of inflation, the ease of holding gold afforded by exchange-traded funds, the credit crunch and a trend towards buying up commodities.
Source: The Economist (registration may be required)
Reference: Gold trading boards
The iShares COMEX Gold trust is a wholly owned subsidiary of the New York Mercantile Exchange where traders can buy and sell gold on the securities market.
Source: iShares COMEX Gold Trust
Streettracks Gold Shares is an exchange-traded fund where investors can speculate on gold.
Source: Streettracks Gold Shares
Related Topic: ‘Oil & Gas Prices Reach New Highs—But Could Go Much Higher’
U.S. gas prices broke another record this week, hitting an average of $3.22 a gallon. Some experts believe oil prices could go significantly higher.
Source: findingDulcinea
Most Recent Beyond The Headlines
© 2012 Dulcinea Media, Inc.
