Posted on 08/22/2011 2:37:15 AM PDT by markomalley
Spot gold surged more than 1 percent to a third consecutive all-time high on Monday, as investors fled to the safety of bullion amid fears of another U.S. recession and the euro zone's debt crisis.
Spot gold struck a record at $1,888.90 an ounce, after staging its biggest weekly gain in 2-1/2 years last week. It traded at $1,888.76 by 0640 GMT.
U.S. gold jumped more than 2 percent to an unprecedented $1,895.3.
A murky economic outlook given a persistent flow of weak macro data out of the United States and fears about the euro zone's fiscal health have propelled gold up by more than a quarter since July.
"We are not expecting anything supporting the U.S. economy or the macro data for at least a couple of months," said Tom Price, Global Commodity Analyst at UBS.
"Europe we regard as even weaker. We are thinking $1,900-$2,000 over a very short period of time is a likely target."
(Excerpt) Read more at in.reuters.com ...
That’s an awful lot of cash for such a tiny amount of a substance with very limited practical uses. At least silver has many industrial uses in addition to jewelry. I think it’s too risky to buy into gold now. Nearly $2,000 for a tiny coin that could plummet in value at any time? No thanks.
There will probably be a correction of sorts on gold in the near future thats for sure. I will possibly be looking to short in the near future. Same with silver, when the economies fix themselves and there is a renewed confidence in the market, these commodities will come crashing down the same way they did in the early 80s.
The only things that will trigger a significant decline in the price of gold will be some sort of pledge to balance the U.S. budget and/or a change in the chairmanship of the Fed. A new regime at the central bank that signalled an end to money printing might do it.
Absent those, I can't see why gold would drop. Even an economic recovery of sorts under the current monetary and fiscal conditions would probably only slow the rise. That said, I can certainly understand why people would find it risky.
The same was said @ $350 an ounce......back in 2001. Yes, it will drop eventually. I witnessed the 1980 gold opportunity from the sidelines....
This rush is different. Bad news fuels the rise in price and bad news stretches as far into the future as I can see....local, state, national and world wide.
The concept of a bubble is fashionable and easy to glom onto to reinforce or describe a belief.
A trend on the other hand is sometimes difficult to spot and even more difficult to analyze. The determination in advance of trend inflection points is at best a guess. There are too many variables.
Bubbles are short lived. A trend that is very obvious, especially when when more than ten years old, is certainly not a bubble. For those hung up on the fact that the price of gold once rose sharply and then fell sharply in an extremely short time just can’t seem to grasp the difference.
The underlying reason is never comprehended because there is the once it rose and then fell concept. There is no valid comparison. The comparison is false. The underlying concept is that the value of gold is rising out of hand, the actuality is that the values of various world currencies is falling at a precipitous rate.
Then there is change. There is comfort in the belief that the status quo will continue. The relation between the price of gold and world currencies should be taken not as a short term variation within the parameters of the current status quo, but as an indicator that there is no status quo. Fundamental economic change is underway.
There is world change underway. To analyze economic events and the price of gold as an American event is folly. Until the view is lifted from the USA lower 48 borders to encompass the globe, there can be no understanding. Change , massive change is underway. The rise in the US$ price of gold is the primary indicator
That is not insignificant.
I love the “the gold bubbles gonna burst” crowd. Ive been reading those comments for the past 2 years. Hilarious!
Gold will eventually come down but like cbkaty says, this economy is a mess and there is nothing going on today that says that will change any time soon. And how bout our rapidly increasing debt? Nothing is being done. NOTHING! So keep up on that bubble talk........
Gold and Silver are going up right now because Chavez wants his Gold back, and PMs are heavily leveraged by paper Gold and Silver. So if he gets his 200 tonnes back, that's about 10000 tonnes of paper Gold sold on the back of that Gold that has to disappear, forcing (some of) the money in the fake paper investments into real Gold/Silver.
Which is why seizing Ghadaffi's Gold has suddenly become much more urgent.
But even without this short-term stress on PMs, the price of Gold and Silver is going to rise at least until 1 oz of Gold buys the DOW. The PMs have a long way to go yet.
“One day” gold will begin a downward trend...but only when the world economies balance budget and full employment is enjoyed by all. Now, let’s imagine ice cubes in Hell..... Assuming ice will not melt in Hell, gold will return to 2000 or 1980 levels.
In the meantime we can all ignore thousands of years of history in support the value of gold.
I began my gold watch in 1980 when my attorney advised me NOT to invest at the $200 level....and instead bought real estate that suffered then as it is suffering now.
I understand most folks can't purchase much gold @ $1881 per oz......but silver is still affordable.
That’s an awful lot of cash for such a tiny amount of a substance with very limited practical uses.
I’d buy silver (up 10% in the last few days) or platinum (little more per ounce than gold, an unusual near-parity).
We might see a temporary correction in gold to $1600 or so, but ending the year at $2000 seems likely.
The price of gold was $900 when Obama took office? That’s why I think this is a speculative gold bubble. I know some say the dollar is falling in value, but has it lost more than half its buying power since Obama took office? That’s where the price of gold stands. Of course people who are speculating on gold rising further will do and say anything to keep the bubble going, especially if they bought in high, but commodity prices aren’t rising that fast.
“One day” gold will begin a downward trend...
hillarys cankles: “I love the “the gold bubbles gonna burst” crowd. Ive been reading those comments for the past 2 years. Hilarious!”
And I love it when everyone in a speculative bubble says the bubble will burst but not any time soon. That’s exactly what people in a bubble say until the bubble bursts, otherwise they wouldn’t be buying in the first place.
Good post.
Those who raise 1980’s spike need to know how different things are now.
In August of 78, gold broke through the $200 barrier after years of trading in the $100-200 range. I’ll bet that some folks back then were worrying that it was a bubble.
By September of the next year (1979), gold doubled its record, hitting $400 (one-third of that gain alarmingly coming in the final two weeks of the period).
In the following 15 weeks, gold doubled again, with half of that rise in the last two weeks of the period. See the pattern, rises happen fast, and faster at the end, like a whiplash acceleration.
Here’s the 1980 bubble summary: New record, followed by quadrupling in price in 1-1/2 years, including a 25% rise in the final two weeks.
In the past decade, we’ve seen some 25% years, but no 25% fortnights (two-week periods). More importantly, it took the last decade for gold to quadruple, while the run-up to the 1980 bubble saw quadrupling in 1-1/2 years. The lesson is that how fast something rises can indicate whether the rise is sustainable, as opposed to being a bubble.
Doubling in a year is common among stocks and commodities in certain years. That’s my threshold for when I start to pay close interest, and worry about “bubbles.”
And I love it when everyone in a speculative bubble says the bubble will burst but not any time soon.
And since you were addressing the post about people’s comments from two years ago, can you opine whether you think those who have been accumulating gold over the last two years will lose money overall after your bubble scenario plays out?
In the past decade, we’ve seen some 25% years, but no 25% fortnights.
I questioned when does gold become to expensive to buy (or sell)?
When does it’s become just as much of a gamble as any other investment?
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