Gold prices surge past $522 level

BBC ^ | December 9, 2005 | London BBC

[DebtAndDelusion]

The price of gold has continued to rise in Asian trading, climbing to its highest level since 1981. Gains came despite concerns that the market may be set for a correction and some analysts are now predicting that prices have even higher to go.

Precious metals have been given a boost as investors look to protect themselves against higher inflation and weakening currencies such as the Japanese yen.

Gold climbed as high as $522.70 an ounce, before falling back.

It was hovering around the $521 mark during afternoon trading in Asia.

'Dizzy high'

"There's some profit-taking now, but look at where we are," said Darren Heathcote of NM Rothschild.

"It's broken $520, the target we had yesterday... and it looks like $525 is the next target."

One broker in Tokyo said that: "Gold has been drawing very strong interest from Japanese investors, and I don't think this boom will subside in the near term."

There are a number of factors pushing the price of gold higher.

Gold is seen as a haven from inflation and weakening currencies, although historically, once inflation is taken into account, gold has not proven to be a good investment.

There is also speculation that Asian and European central banks may cut US dollar holdings in favour of gold.

There also is the year-end increase in demand for jewellery, analysts said.

The price of gold has climbed almost 19% this year and has nearly doubled during the past five.

"It's a dizzy high," said Rothschild's Mr Heathcote, but warned that "we are looking at a very overbought market".

"We're looking for a correction. It has to come at some point," he said.

[Eagles Talon IV]

"I don't think this boom will subside in the near term."

Look for the "smart guys" to get out shortly leaving the novices, who actually believe this or any other market only goes up, holding the bag. The huge spike up in the past several weeks is imo, the last surge before the bottom falls out.

[Eagles Talon IV]

If you take an average of the high and low for each of the years and adjust them for inflation adjust those figures for inflation you will see just how bad an investment gold really is relative to equities.

[Tijeras_Slim]

I can't claim to be an economist
How modest of you.

Father and Gramps used to have some terrible arguments about gold. Gramps was an old Bryan supporter and made the cross of gold argument all the time with Father.
Insanity does run in some families. It's a miracle Grandma didn't take the side by side to the both of 'em.

Unfortunately Father bought stocks on margin in 1929.
I guess he can't claim to be an economist either.

Darn Islamics and Asians buying all the gold
I guess only aryans should have the bling.

The working man in this country is getting it from every end.
Gee, that's new, different, and original.

Still got the farm, still got the gold and still have most of my teeth.
How could Maslow miss these in his hierarchy of needs?

Sheesh....

[eyedigress]

That is true, but if you did buy last year at 375.00 and sold now at 520.00 that's a pretty good take.

(Tax free) :^)

[Fierce Allegiance]

If you were half as bright as a bar of gold, you'd be ok.

[mr_hammer]

have most recoved what they lost from the markets post 911?

[mr_hammer]

what if you bought at $250.00 during the mid 90's?

[martin_fierro]

SLIMMVS WITH THE OBSCURE MASLOW HEIRARCHY OF NEEDS REFERENCE!!!!!

I didn't think anyone thought about that one.

[Tijeras_Slim]

Only becuase I couldn't fit him in to and of the stages of Piaget’s Theory of Development. Although, Louis Terman would have to dig a new basement for this guy.

[Tijeras_Slim]

What the hell and I typing?

[Eagles Talon IV]

Right, but I was comparing them to equities and was looking at the long term. You will find many stocks that will have done far, far better then gold over the same period of time. Gold is a haven for safety and not growth.

[eyedigress]

Subtract the inflation and you have your net gain. Considering a 100% gain minus inflation adjustments you still come out ahead.

[Squantos]

I did.....

Historical gold prices - Annual gold bullion prices

Yearly high and low gold price since 1972
Daily London close of spot gold prices

 

Year	High	Low		Year	High	Low
1972	70.00	44.00		1990	423.75	345.85
1973	126.00	64.00		1991	403.00	344.30
1974	195.00	117.00		1992	359.60	330.20
1975	185.00	135.00		1993	406.70	326.10
1976	142.00	102.00		1994	397.50	369.65
1977	168.00	127.00		1995	396.95	372.40
1978	243.65	165.70		1996	416.25	367.40
1979	524.00	216.55		1997	367.80	283.00
1980	850.00	474.00		1998	314.60	273.40
1981	599.25	391.25		1999	323.50	252.80
1982	488.50	296.75		2000	325.50	264.10
1983	511.50	374.25		2001	291.45	256.65
1984	406.85	303.25		2002	342.75	277.75
1985	340.90	284.25		2003	417.25	319.90
1986	442.75	326.00		2004	454.20	375.00
1987	502.75	390.00
1988	485.30	389.05
1989	417.15	358.50

[JasonC]

M1 is flat, not growing at all. M2 is growing 4-5% per year. M3 is growing 8% per year - and just broke $10 trillion. Widest divergence seen.

That sort of thing is usually a sign that bankers have found ways around the controlled variables. There is an endless game central banks and the rest of the banking system play. Central banks control money creation by targeting variable X. Banks come up with ways to leave X essentially unchanged yet create additional effective money Y. Central banks target Y. Banks invent Z. Etc.

Incidentally, CPI measured inflation in the last year was 4.3%, significantly above the 3.2% average since 1982. The Fed has been tightening for a reason.

[Toddsterpatriot]

Gramps was an old Bryan supporter and made the cross of gold argument all the time with Father.

Do you know what the gold vs. silver argument was all about?

[Toddsterpatriot]

(Tax free) :^)

How do you figure your gold profit would be tax free?

[eyedigress]

Did I say Tax Free? oops..

[Oatka]

Buying and selling precious metals, like sex, is all about timing.

Back in the '70s I read a great book by Harry Browne with the numbing title "How you can profit from the coming devaluation". I was on vacation and stayed up until 3 a.m. reading it. The guy was spot on. Before I got back from vacation, there was a devaluation. (Devaluation is the government euphenism for bankrupcy - as in a 50% devaluation in effect says the country is bankrupt and will pay off debtors at the rate of half what is owed them.)

Remember the "dual rate" of LBJ? The govt said gold was worth $44 an ounce, but wouldn't redeem any dollars in that (foreign govts could still demand conversion - LBJ talked them into taking silver instead at 95c an ounce, all the while exhorting people not to hoard silver - Gresham's Law* proved once again.). The free market immediately went to $48, when I bought in.

I bailed at $105 an ounce, kissing my hands at what a smart speculator I was - it CAN'T POSSIBLY go any higher. Got back in at $125 and stayed until $525 when I figured that was absolutely the tops. Jesu, what a ride!

Out of all that, what sticks in my mind was walking into a coin shop with $52 face value silver coins and walking out with $1004. Talk about being stunned!

A long time ago, a wise man said that gold was the thermometer of the world's condition, so maybe these Asians know something we don't.

*Bad money drives out the good. If you have two coins, one intrinsically worth more than the other but of equal buying power, which would you keep?

[mr_hammer]

very good post!

[Toddsterpatriot]

BTW, My HOUSE has appreciated in value MORE than gold in the last 5 years. So I guess you could have bought gold, but you would have been better buying your neighbor's house.

And when you sell your house you can legally exclude $250,000 ($500,000 for a married couple) of profits from capital gains taxes.