Gold hits $700 for first time since 1980

Reuters ^

[Capitalism2003]

NEW YORK (Reuters) - U.S. benchmark gold futures scaled a new 25-year high at $700 an ounce on Tuesday, boosted by relentless investor buying powered by geopolitical concerns and expectations of further price gains ahead, dealers said.

By 11:30 a.m. EDT, June delivery gold on the New York Mercantile Exchange's COMEX division was up $20.10 or 2.9 percent at a session peak of $700, which marked the loftiest level for futures since September 1980.

[jiggyboy]

So if I bought gold in 1980 I just broke even.

Could you rephrase that? Your statement is true, it meets the definition of "information", but that's all.

[thackney]

Actually gold prices are more influenced by currency values, not inflation.

Are you claiming Tokyo market has not seen similiar change when priced by the Yen?

[Paddlefish]

I still remember my roommate in grad school during the Iran hostage rescue disaster. He was completely into money, and when he awoke the morning of the debacle and I told him what was being reported on the news, his first words were, "BUY GOLD!"

[HEY4QDEMS]

No, high gold prices generally mean the dollar is doing badly.

In 1980 the dollar was at one of it's lowest values since before WWII and gold was way up.

I suspect the US dollar is down right now although I haven't been following it lately.

[HuntsvilleTxVeteran]

When the not "Federal" not "Reserve" was started to relieve our elected officials from having control over our money, the USA $ has went down from $20 to a little over $0.003

[Enterprise]

I told people to start buying gold when it was near 300 an ounce. I'm not a genius, but you could see with steady rising oil prices that it would eventually spike up. Now though, is difficult to call. On the radio today was a statement that gas is likely to fall 75 cents a gallon by Labor Day. If true, that should let some air out of Gold. However, we will still have some inflationary effects, and there is still the tension in Iran. What to do, what to do. So I will boldly predict, uh, something may or may not happen to affect the price of gold in the next few months.

[uncitizen]

The price of gold is at least partly based on confidence in the stability of the USA. That must be dwindling.

[HuntsvilleTxVeteran]

3 cents not .3 cents!

[BeHoldAPaleHorse]

Folks, gold hitting $700 an ounce is not good news.

It's almost entirely being driven by young men in Asia looking to...ahem...score. Apparently, the female desire for shiny adornments is cross-cultural.

There hasn't been a significant increase in supply, but (legitimate as opposed to speculative) demand has skyrocketed. Supply will probably expand in the coming year as mining operations ramp up, and that means (a) prices will stabilize, and (b) there will be a LOT of hucksters shouting "BUY GOLD!" in a last squeezing of the grapes...

[BeHoldAPaleHorse]

However, the hype on TV and the internet gives me pause. It reminds me of the net stock mania in 1999.

Hell, it reminds me of the gold mania of 1980-81. But we're not supposed to notice that.

[HEY4QDEMS]

Are you claiming Tokyo market has not seen similiar change when priced by the Yen?

That depends how well the Yen is performing, Gold is an international currency standard as is sterling.

Where it is true that speculative pricing and buying does occur, it's main valuation is determined by currency exchange with the greatest fluxuations against floating currencies like the US Dollar and Euro.

[HEY4QDEMS]

One other point to remember is that up until the Great Depression, the US Dollar was on the gold standard.
Had FDR not taken us off the gold standard, (he took us off silver as well), then yes the Dollar would be doing very well when Gold is doing the same.

[n-tres-ted]

Folks, gold hitting $700 an ounce is not good news. You are certainly correct. The value of gold does not change, and the supply is so large (since gold is not consumed and does not waste) that supply/demand does not importantly affect the price. Therefore, the price of gold is a very accurate signal of the spot value of the dollar. Unless the Fed can get the price of gold back down (and assuming the gold price goes no higher than $700/oz), the U. S. can expect general prices to rise 50% during the next 10-15 years. The Federal Reserve is being run by demand-side economists from the universities, who do not understand the necessity of keeping the dollar's value honest and stable.

[buccaneer81]

That $850 oz. of gold would have to sell for about $2200 today in order to recover the real value of the original $850.

Thank you. I'm amazed it took 13 posts to make that point.

[BeHoldAPaleHorse]

The value of gold does not change, and the supply is so large (since gold is not consumed and does not waste) that supply/demand does not importantly affect the price.

Wrong.

Supply and demand are in play here, because a lot of young men across Asia (a) now have money in their pockets, (b) are courting the affections of various young ladies, and (c) discovering that sweet young things tend to like receiving shiny adornments.

The worldwide demand for jewelry has simply skyrocketed in the past couple of years, and the remaining slack in supply has now been taken up.

[simon says what]

It's real value was exceeded after gold passed $550.

Why $550 ? What do you mean by real value ?

[B-Chan]

Why oh why didn't I buy silver at 4.50. I nearly did...

I did.

PARTY
HARD

[Hot Tabasco]

There are people out there that think there is trouble ahead

There are a lot more people who think the gold buyers are panicking and laughing at them.

I think too many of them are listening to the "Buy Gold" commercials that are running rampant on all the radio talk shows.........

[mikrofon]

Gold!

[BeHoldAPaleHorse]

I think too many of them are listening to the "Buy Gold" commercials that are running rampant on all the radio talk shows

Generally, I never take financial advice from talk radio commercials.