Saturday, April 30, 2011

Gold hits new record of $1,570 as US$ falters


Gold has closed the week at $1565 as increasing numbers of US investors sort safe harbour in gold to protect themselves from an increasingly weak $.

Gold traded higher throughout the New York sessions and briefly touched an all time high of $1570 before settling back to $1565 at the close.

From the Sydney Morning Herald:

Erosion of faith in currencies, particularly the US dollar, is paying off nicely for Australia's gold miners, whose production has increased with the ever-rising gold price.

For a man carrying the title of ''Treasurer'', Peter Costello sure seemed comfortable getting rid of the treasure.

It was the winter of 1997, and the Reserve Bank of Australia had decided that a gold price around $450 an ounce was the ideal time to part with two-thirds of its bullion.

Conducted in secret over several months, the move spectacularly punctured both the gold price and confidence in the local mining industry.

As the gold mining sector cried treason, the fresh-faced treasurer stood firm behind the RBA's $2.4 billion decision.

''Gold no longer plays a significant role in the international financial system,'' Mr Costello was widely quoted as saying. ''One holds it for purposes of diversification.''

Fourteen years and a healthy dose of hindsight later, gold has more than tripled its value against the Australian dollar, and almost quintupled against the ailing US dollar.

The same stockpile would fetch about $7.6 billion if sold today, meaning we are more than $4 billion behind on the deal after accounting for inflation.

As the utterances of US Federal Reserve chairman Ben Bernanke helped propel gold to new heights this week, the metal that seemed to have lost its lustre in 1997 is fast reclaiming its standing as the world's currency of choice......read on

No comments:

Post a Comment