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Gold blows through record highs, closes in on $1,100 per ounce

Gold is shooting toward $1,100 per ounce in trading today, already having blown through its record highs.

What's going on?

I wrote a lengthy piece on the price spike in gold in late September, when gold was on its big rise. You can read that piece by clicking here. The reasons for gold's continued spike today are the same as then: fear.

Fear of a continued devaluation of the dollar, fear of the massively swelling national deficit and debt, fear of consumer inflation, fear of anything that isn't a hard asset.

You want fear? Check this out: The government of India on Monday bought 200 metric tons of gold from the IMF, nearly half of the 403 tonnes that was up for sale in September. India bought all this gold at the height of the market, with no bulk discount. This of course drove up the price of gold.

There is a limited amount of gold in the world, above ground and below ground. As governments continue to hoard gold (China is doing it, too), the price will continue to climb. This is a direct comment on the rest of the world's faith in the U.S. dollar, which continues its year-long slide.

-- Frank Ahrens
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By Frank Ahrens  |  November 4, 2009; 11:12 AM ET
Categories:  The Ticker  | Tags: IMF, gold  
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Posted by: usapdx | November 4, 2009 11:52 AM | Report abuse

Fear, sure. But gold has been the only sustainable money throughout history.

All paper monies eventually die a grisly, hyper-inflated death. We've let that happen with the U.S. Dollar. If you don't back a currency with some commodity, then watch the banks expand the money stock well beyond the boundaries of reason. That's what we've been seeing in America for the past 40 years - "growth" fueled by un-payable debt.

Posted by: patrick4 | November 4, 2009 1:18 PM | Report abuse

I have been buying gold and silver for the past 5 years, the increase in my worth in these metals is higher than what the banks are paying me for my CD's and I have no regrets if the dollar does become worthless I will have enough "real money" to feed my family for months, while the people on the capitol hill figure out how to fix.

Posted by: mikey30919 | November 4, 2009 1:39 PM | Report abuse

"If you don't back a currency with some commodity, then watch the banks expand the money stock well beyond the boundaries of reason."

Great. Now what happens when your economy gets bigger than the supply of gold to back it up? What happens when foreign countries buy up gold, leaving us with less?

The total amount of gold mined throughout *all of human history* is about 158,000 metric tons, which is about 5.1 billion troy ounces. At $1100 per ounce, that's $5.61 trillion. In contrast, the total GDP of the US in 2008 was $14.4 trillion.

Posted by: presto668 | November 4, 2009 2:22 PM | Report abuse

So, who in the Obama administration or what Congress oversight committee is looking into this record price for gold? Or are they going to wait for the bottom to fall out of the gold market and the look for someone to blame for the fall?

Posted by: ahashburn | November 4, 2009 2:52 PM | Report abuse

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