Posted on 05/11/2006 9:20:26 AM PDT by Jack Black
Gold Soars to New 25-Year High Above $725
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NEW YORK
Gold prices surged to a new 25-year high above $725 an ounce Thursday, on inflationary worries expressed by the U.S. Federal Reserve.
Persistent concerns about Iran's nuclear ambitions also lifted the metal, which is viewed as a hedge against currency weakness, inflation and geopolitical instability.
The June gold contract rose as high as $728 an ounce Wednesday on the New York Mercantile Exchange, its strongest level since 1980. It eased back in morning trading to $726.50, up $20.80 on the day.
The gains came despite the dollar's modest recovery against other major currencies after the U.S. Federal Reserve lifted interest rates to 5 percent and left the door open for further hikes.
Gold investors focused instead on the inflationary fears expressed in the Fed's statement and on the possible inflationary impact of surging prices of crude oil prices and industrial metals, traders and analysts said.
"Inflationary expectations seem to be rising in the U.S. and you could argue some of those expectations are coming from rising commodity prices," said Robert Rennie, chief currency strategist for Australia's Westpac bank.
Gold continues to garner support from concerns over the implications of a showdown between Iran and the U.S. over Tehran's nuclear ambitions.
At the same time, speculation that China and other Asian countries may be turning to gold as a way to reduce their foreign reserve holdings _ mostly denominated in dollars _ on a weakening U.S. dollar is also spurring investor sentiment, participants said.
"With all the rumors still about of China and the Iran issue still playing on people's minds, the dollar's not really driving gold at the moment," said Darren Heathcote, trading head at Rothschild Australia.
"The pure weight of funds going into commodities is driving prices, not just fundamentals," he said.
The all-time record for gold was set in January 1980 when it hit $875 an ounce in a huge day-and-a-half surge. But it quickly fell back under $700.
Interesting trend that speaks to a looming instability at the foundation of the house of cards, the dollar.
When Volcker is appointed to the Fed, the FedGov resumes the publication of the money supply, and Medicare/Social Security are abolished.
Is Carter still president?
Time to sell my jewelry!!
bttt!
The question is when to get out of gold, silver, and the U.S. dollar and get into lead, bronze, sheet steel, welding rods, and Craftsman tools.
Discontinuance of M3
On March 23, 2006, the Board of Governors of the Federal Reserve System will cease publication of the M3 monetary aggregate. The Board will also cease publishing the following components: large-denomination time deposits, repurchase agreements (RPs), and Eurodollars. The Board will continue to publish institutional money market mutual funds as a memorandum item in this release.
Measures of large-denomination time deposits will continue to be published by the Board in the Flow of Funds Accounts (Z.1 release) on a quarterly basis and in the H.8 release on a weekly basis (for commercial banks).
M3 does not appear to convey any additional information about economic activity that is not already embodied in M2 and has not played a role in the monetary policy process for many years. Consequently, the Board judged that the costs of collecting the underlying data and publishing M3 outweigh the benefits
The headline should say "Dollar Falls to New Low Against Gold".........
Just think what $725 would buy back in 1981. If you invested in gold 25 years ago you would have lost half your value or more. No thanks.
"Interesting trend that speaks to a looming instability at the foundation of the house of cards, the dollar."
?
"The all-time record for gold was set in January 1980 when it hit $875 an ounce in a huge day-and-a-half surge. But it quickly fell back under $700."
Talk about a house of cards ! Some poor fools actually bought in to gold at $875 !
Coming - the hangover !
BUMP
"Interesting trend that speaks to a looming instability at the foundation of the house of cards, the dollar."
That, or thermonuclear war.
Nothing like cherry-picking price points, eh? Stock pumpers-and-dumpers do this too, crufting together portfolios that would have been technically if not practically impossible. Mutual funds, particularly index funds - are probably the most egalitarian investment yet. But they are a sort of guaranteed mediocrity as well, compared to pure stock plays. I remember talking to a semi-professional and allowed that diversification meant something other than just small-caps, mid-caps and large-caps, she about dropped her martini. The average investor has access of tools and markets that were unheard of just a few years ago. My dad went through a broker, and it always seemed to me anyway, they churned him and his smallish egg with strange investment advice. Truth is, nobody is going to watch my money better than ME. While there are some great brokers out there, I don't have enough coin for them to bother with. That's not a criticism, just an observation.
Well yes.
But my point was that gold has been promoted heavily over the last 25 years as a great investment. It has been a terrible investment until the last 6 months or so. The problem is that gold doesn't pay interest or dividends so there is not fundamental source of income. It is an inflation hedge pure and simple. In a fair world an investment in gold will allow you to keep your value. In our world real estate is a much, much better choice.
I should find out how much my gold teeth are worth now.
" It has been a terrible investment until the last 6 months or so"
you are provably wrong, since 2001 my gold has doubled and silver tripled, just get the gold or silver chart for the last 3 to 5 years. If that's a terrible investment , I'll take more of these - please.
Lurking'
Ah yes, Carter's stag-flation. I remember it well.
But the market's humming along. What gives?
Yup.
Well you were right about that but any investment can be good in the short run. But look at the chart below, uncorrected for inflation, the very thing that a gold investment is supposed to protect you against and you will see that on the average gold has been a terrible investment.
In fact gold only recently passed through 50% of it's all time high. Corrected for inflation that would be more like 25%.
It's like bashing the Nasdaq because it is far below its high. I bet it will take more than 15 years for the Naz to eclipse its old high.
NASDAQ Composite
On an inflation-adjusted basis, the record high of gold ($850) is about $2200 today.
Congratulations, shiny metal god, you're a third of the way there!
Dumbest "What if" I've ever heard.
But my point was that gold has been promoted heavily over the last 25 years as a great investment.
By Who??? In what alternative universe have you resided in the last 25 yrs?
But the market's humming along. What gives?
The market is falling when priced in Gold. That's what gives!! People are starting to realize that fact.
Why would you price the market in gold?
LOL. Well I guess you could call Talk Radio an Alternate Universe. It seems so at times. Listen to Michael Medved and Hugh Hewitt. Commercials all the time for buying gold. I've been hearing these commercials for years on these shows and others.
The market is falling when priced in Gold. That's what gives!! People are starting to realize that fact.
'T'aint just gold, nor gold and silver. Copper has hit $4/lb, which may not be a record but is higher than I can recall since I began paying attention, which was quite a few years back.
I'm thinking the next items to watch are lead, bronze, sheet and angle steel, welding rod, and Craftsman tools.
It's back down at 714 now. I'll bet a few folks took some profits before noon.
So you point is, Michael Medved and Hugh Hewitt have been on radio for the last 25 yrs advertising Gold as an investment. LOL
To arrive at real value.
Your chart says that you could have bought gold in the early 1970's for $35 and it worth over 700 today. 21 times your money in thirty years isn't that bad of an investment. How gold or any investment performs depends ont he time frame you are looking at.
No, silly. I know they haven't been on the radio for 25 years but others were. George Putnam for example. He goes back quite aways. I'm sure there were others.
It's no big deal. All I trying to say is that gold is now about where it was 25 years ago. This is good investment?
If we were having this discussion in 1970 I would be agreeing with your position. It was a great time to be into gold. But from 1980 up until a couple of years ago it has been a LOSER. You wait 25 years and you get all of your money back. WOW.
Pricing it in dollars doesn't give you its real value?
When the dollar is worth zero, what is gold worth? I don't mean to be an alarmist, but we are comparing paper to gold here aren't we?
My point is that if you pick the last high until now, yes its a bad investment. I bought gold at $290 and silver at $5.37 and I'm smiling today.
Depending on the time frame you are looking at Microsoft has been a great and and poor investment. If you bought in 1986, it was a great investment. If you bought in 2000, you lost 2/3 your money.
For some reason, some people think we should price the stock market in gold. Do you agree? Why?
When the dollar is worth zero, what is gold worth?
And when is the dollar worth zero?
To the extent that the dollar should be backed by a precious metal. Were you in college? What did they tell you there? Just curious.
Why should the dollar be backed to any extent by a precious metal?
Were you in college?
When?
What did they tell you there?
About what?
Just curious.
Did you have a point in here somewhere?
Other that you can't be honest, I guess not.
I heard IBM closed at 0.114289674 ounces of gold today. Wow!!!
What does my college experience, whenever that was and what they told me, whatever that was, have to do with this topic?
Quite a bit actually. You still haven't answered my question on what they told you. Why not?
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