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Posted on 10/06/2009 7:59:28 PM PDT by SeekAndFind
The price of gold has hit an all-time high amid reports that Gulf states are considering dropping the dollar for oil transactions.
The value hit 1,043 dollars an ounce, beating the previous record high of 1,032.70 in March 2008 when the US investment bank Bear Stearns began its demise.
Crude oil prices also moved higher as the dollar weakened.
The soaring value of gold follows a report in the Independent newspaper that claimed Arab states had held secret talks with China, Russia and France in which they debated whether to stop using the greenback for oil trading.
The newspaper said gold could be used as temporary replacement for the dollar.
The report was denied by Saudi Arabia’s central bank and a Kuwaiti minister.
Even so, the aftershocks rippled through the currency and bullion markets.
Such a step, although dismissed almost immediately by Saudi Arabia, Russia, the UAE and Algeria, obviously weakens the dollar, which should be supportive for oil prices - in dollar terms that is," PVM oil market analyst Tamas Varga told AFP.
Barclays Capital precious metals analyst Suki Cooper said: "The dollar weakness appears to be related to ... (reported) secret talks about oil being priced in a basket of currencies including gold rather than the dollar, which has added to concerns about the future role of the dollar in international financial markets."
Commerzbank described the Independent's report as "completely nonsensical".
The paper said the dollar would be replaced by a "basket of currencies including the Japanese yen and Chinese yuan, the euro, gold and a new, unified currency planned for nations in the Gulf Co-operation Council, including Saudi Arabia, Abu Dhabi, Kuwait and Qatar".
Any such move would threaten the dollar's role as the world's premier currency and would have potential to seriously damage the US economy.
(Excerpt) Read more at news.sky.com ...
adjusted for inflation, it’s no where it’s all time high.
Yup, and the ratio of the dow to gold was around 1:1 back in Jan 1980. It’s about 9:1 or 10:1 right now. $5K an ounce gold paired with a dow at 5000 is foreseeable.
We’ve still got a couple of highs and lows to go through. But in my opinion, the dollar is definitely circling the drain.
Just like poop
PE ratios are what, 10x what they were in 1980. Is that correct?
“Adjusted for inflation, it’s nowhere near its all time high.”
Ain’t that the truth? It’s funny, because perhaps the primary concept in any gold discussion is the devaluation of currency, and yet we still hear about gold being near a “high” while comparing this “high” with 1987 dollar prices. Amazing.
gold bubble alert! i feel a scalping coming on...taxi cab driver is touting gold etf’s...time to sell....
Well if I had any gold I would be hanging on to it, silver too, if I had any. I was hoping I would get a chance to buy gold at $950 and silver at $15.50 sometime this month, maybe that ship has sailed. We’ll see.
Gold and the dollar usually move in the opposite directions in value. Buy gold if you can.
I think about 2200-2300 would be the all-time high in todays numbers.
That I don’t know (about the P/E ratios). The dow was basically flat from about 1964 to 1982. There were ups and downs, but the low of the 80s was below the high of the 60s. Gold performed very well in the 70’s, when the dow was flat. Gold was under $50 in 1970, and went to $850 in 1980.
Golds biggest jump was during Carter. The Carter low was under $135 in Jan/Feb 1977. The Carter high was $850 in Jan 1980. That’s up 6x in 3 years. Jan 1979 gold was at $220. That’s up 4x in 1 year.
The Obama low in Jan 2009 was about $850. $850 x 6 = $5100. If Obama is Carter II, and theres Carter style stagflation, $5000 gold is not unreasonable.
Silver hit $50 an ounce in Jan 1980. Silver is less than $20 an ounce at this point.
Interesting times indeed, then and now.
In about two years...as the dollar really goes to low levels beyond our imagination...the idea of a joint Mexican-Canadian-US currency will finally occur. That will be a sign of how badly Wall Street, the White House, and the Harvard Graduates handled the economy over the past thirty years.
I saw that as well, silver up over a buck today.
I was hoping silver would drop to under 15, but, like you I doubt that will happen anytime soon....
adjusted for inflation, it’s no where it’s all time high.
How do you add in the fact that back them, your dollar got you more oil or washing machines?
Extreme negative sentiment like this is usually seen just before a change in trend.
CPI calculator
http://data.bls.gov/cgi-bin/cpicalc.pl
A gentle reminder that we have noted here on FR for years that BLS greatly underestimates inflation regardless of administration or economic climate.
Could it be that if such a regional currency comes to pass, that the US healthcare reform as presented by the Dems is INTENDED to become the dominant medical plan also for all three countries in scale, scope, capability and application...you know, MISERY FOR ALL!!?? The Obama healthcare proposal, the public option teamed with immigration amnesty, essentially allows what could be the entire population of Mexico to be absorbed by the US healthcare system if they make a trip and sign up. Our border is certainly not stopping them.
Much of the spp.gov (North American Union ideas) earlier and continuing efforts of military integration are modelled around medical cooperation and integration in the setting of an epidemic..US Army Northcomm is involved even now with Canada and Mexico re epidemic issues relating to Swine Flu.
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