The price of gold struck an all-time high at 1,038.65 dollars an ounce here on Tuesday as the dollar fell on a reported plan by Gulf states to stop using the greenback for oil trading.
The dollar’s future as the world’s top currency was thrown into doubt on Tuesday as a report said Arab states had launched secret moves with China and Russia to stop using the greenback for oil trading.
They would instead switch “to 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 (GCC), including Saudi Arabia, Abu Dhabi, Kuwait and Qatar,” added Fisk.
Gold, viewed as a safe-haven investment, has won back favour in recent months as the global economy struggles out of its worst slump in decades.
The run-up in gold has been largely driven by weakness in the dollar, which makes dollar-priced commodities cheaper for holders of stronger currencies, boosting demand.
Gold also wins support from fears about higher inflation because the metal is widely regarded by investors as a safe store of value.
I don’t really understand this. Just because the value of the USD plummets, are they implying the value of has gold goes up? Just because it takes more USD’s to buy an ounce of gold, doesn’t translate that gold’s value has increased. Does it cost more Euros to buy gold now? Does it cost more Yen to buy gold, or any other monetary unit that isn’t dropping in value?
I had a $60K CD mature when gold was $800. I laughed when it was suggested I buy gold.
Gold has always been the shelter for the fearful investor. Thanks to the crisis it’s value has quadrupled in 7-8 years. The demand for gold keeps growing, all that money in a dead end asset. Those that invest in gold aren’t investing in the growth of the value of gold, they’re investing in the shrinkage of their own currency.
@1
“Just because the value of the USD plummets, are they implying the value of has gold goes up?”
no
“Just because it takes more USD’s to buy an ounce of gold, doesn’t translate that gold’s value has increased.”
of course
“Does it cost more Euros to buy gold now? Does it cost more Yen to buy gold, or any other monetary unit that isn’t dropping in value?”
yes
the value of something (gold) went up so you have to pay more money for it.
a good example is something like this (someone correct me if im wrong) i give you 100 candies for 100$ and everything is good. now the economy tanks and i give you 100 candies for 120$ and so on and so forth until its 100 candies for 200$. Now you start noticing other countries can give you a more values money for the same amount say 100 euros for 100 candies. better profit because now that money is actually worth more to more and that country is ok with it because thats not a lot of money to them because their economy is good. now we cut out the middle man of the central bank and just put our wealth not in a fluctuation currency that can drop in value due to poor decisions but rather in a material item that’s value is always steady if not rising. so now its 100 candies for 100 grams of gold. if this is invested rather than put into their business money they can in a few years flip the gold they aquired and double their investment.
pardon all of the grammar mistakes and possible wrong answers.
I like that they finally made that app cool.
Gold is a commodity. When your money becomes worthless, it takes more of it to buy the same commodity. Even the DU crowd should understand that.
But then, they still defend what 8 years of unrestricted republican greed has brought upon the once great and admired U.S.A.
Food for thought. In the 50’s the Japanese exchange rate was 360 yen to the dollar. Today it’s 88 yen to the dollar.
Our money once made from gold, is now so worthless we can’t even afford to make it out of copper. Today even the penny is clad…in copper.
Gold is acting like a currency right now simply because there is not a better currency than the dollar. Central banks are worried about the staggering debt the US Treasury is willing to attempt to sell and use for both private investment and totally wasteful government “stimulus”. If inflation happens (well it’s going to happen, how much we don’t know) then the dollar will be worth less and hence investments that buy and sell in dollars are going to be worth less (from treasuries to oil) and countries that move a lot of dollars are very nervous about this.
Where this story is misleading (a misleading economic story that’s a first) gold is not just seen as an inflation hedge about the U.S. dollar but is rather acting as a hedge against all currencies. As your currency depreciates in value, the consumer has less purchasing power and therefore it costs more to buy the same number of goods. Gold in inflation-adjusted terms is well below its traditional highs. That’s all that’s going on here. The next stop for gold is $1200.
This story is not a big deal really, California’s business unfriendly economy for example (because it’s 10% of the US economy) is a much bigger economic story than gold hits $1000, but it’s harder to scare people about something that’s coming in a few years. You don’t sell advertising unless you scare people, legacy media 101.
#1 and #4
Gold is subject to Supply and Demand. As more and more people dump dollars because the dollar is slipping, they search for a more solid value to trade, the more pressure and demand is put on gold, hence the rise in price.
So what is it about gold that is so valuable?
I realize that, as a metal, is has some useful properties. It is nice and shiny. But you can’t eat it. And if you want to exchange it for food, you might find it difficult to use at Wal-mart or 7-11.
Now it does make some sense for the Gulf states to reduce their $US reserves and perhaps use Euros. Although since the Euro is high relative to the $US this might not be the best time. It would be a classic example of selling low ($US) and buying high (Euro).
And using Chinese Yuan – well the Chinese would certainly love that. The yuan is perhaps the most heavily government manipulated currency there is. Selling oil priced in Yuan would be like telling the Chinese they can set their own price for oil.
Canada, which BTW, is the largest foreign oil supplier to the US, will likely continue to have large $US reserves. Canada buys a lot of stuff from the US. And the US likes to be paid in $dollars.
It’s Obama and his universal health care fault!
Kuwait Dumped the Dollar several years ago, and they have never looked back… The Kuwaiti Dinar is worth more today,..It only seems commons sense that the remaining Oil Producers will do the same, and will eventually create a common currency in the region. Ultimately It will be pegged against nothng and will float against the Dollar, the Pound and the Euro…
Another step down on the ladder for America… Thanks Guys!!! The Bushites should be proud again… Since Clinton Left Office…the US has been faultering… I can even remember when Bush was first elected, he even talked about huge rebates and checks for every every american, because we actually had a federal surplus…(left over from the oprevious administartion)…but it appears the Fox news organizations of the world have forgotten this type of news…… Thanks George (and Co)…
I’ve always thought that the reason gold is considered as a safe investment is because the “production” and “consumption” of gold has been bery equal/stable over the years.
It’s not like papermoney (dollar) that you can just print more of if you need it (which creates greater inflation)
Sorry my bad english and possible wrong answer. ( I’m norwegian and it’s late 🙂
I see now that I have answered a question that has not been asked..
Move along people. nothing to see here.
I’m gooing to bed now 🙂
I see now that I have answered a question that has not been asked..
Move along people. nothing to see here.
I’m going to bed now 🙂
Silver is at 17.28. an OZ
Organic Spicey Salad Sprouts are 18.00 a lb. and they grow in 3 weeks.
Hint Hint California people.
A Saudi prince adds another solid gold bathroom, this is what happens.
So where do you put your money?
If the dollar drops dramatically the fed will have much bigger problems than holding up the S&P. Without constant support the market will drop. Hence stay away from stocks. Corporate paper will dry up with the removal of the implicit fed guarantee. Stay away from corp bonds. Since all markets have been linked over the past year stay away from all foreign equities.
My general feel is to favor the creditor nations and slight the debtor nations.
So… a mixed basket of TIPS, foreign currencies, and some gold.
Right now I’m much less concerned with returns than with protecting capital.
Am I missing anything? Suggestions?
It still sounds to me that the value of gold is based on the money that can buy it. That’s a complete illogical loop-feedback, that makes no sense to me at all.
That’s like measuring an object’s length with a ruler that keeps changing scale every second, based on opinions from a committee. It’s not becoming shorter or longer because the measurement keeps changing, it’s STILL the same length.
As for the value of a dollar (or whatever monetary unit you use in the country you reside in) what controls the value of THAT? ..and to what measurement do we use to base this on? It can’t be a precious metal since the value of THAT is based on whatever monetary unit you want to use, and I’ve already argued this “measurement” of that is already arbitarty.
Why isn’t there a set standard that all money can be measured against, is static, and MAKES FUCKING SENSE!
Thank the Federal reserve for taking us off the gold standard. I believe the Euro did the same thing to European economy too. At least the British Pound is still based on Sterling Silver? no?
This is the article this thread is based on.
Borrow high and payback low…
Sorry US, this is going to hurt. Gold, and maybe some forms of gold backed currency, will become the unit of international trade. Relatively stable currencies will still be in play for a while along with oil backed currencies. But over time if you want to buy and sell across borders, you will need gold.
OK, well, before that happens, we just keep the contents of Fort Knox.
Generally it’s good for us to have the Dollar be the currency of choice but who can blame any county for wanting to use a diversified system. It’s just a bad plan to have all your eggs in one basket. Frankly I’m surprised it has taken this long for the countries that are non to keen on us to get off the green back standard. As stable as it has been historically its still one basket. And no you can’t blame Bush, Reagan or even Obama this was inevitable. Blame Disney it is a small world after all
Do a yahoo chart on gold prices over the last decade.
#23..”OK, well, before that happens, we just keep the contents of Fort Knox”
Is there any Gold in Fort Knox?… I think the Wanker Bankers have claimed it all…we have none!!
Nixon took us off the Gold Standard… another fine move by the Republicans… although I still think he was more Honorable of a man athan Dubbwya could ever hope to be…even with “WaterGate”…
I just wanna know when they’re gonna start stringing up the banksters like the 1873 banker hangings on the lampposts.
Shoeshine boy whispers: “Buy gold!”
It always goes back to gold
Guess that it was inevitable
Interesting as well that oil as a currency hold of value
Guess why it has a reputation as “black gold”
The value of the dollar is falling. People don’t want to get stuck holding something that will be worth less tomorrow than it is today so they buy gold.
We may end up going back to gold as an international medium of exchange because foreign nations don’t want to get stuck with what is actually used paper.