Gold developed a slight upward trend late in Hong Kong and rode that trend mostly sideways through the end of the day to a marginal gain. The yellow metal closed at $925.30/oz., up $4.50. Overnight, gold is up sharply.
For the week ending 10 July 2009, it seems to have been almost all down hill since I last posted my commentary two weeks ago. Gold and silver bullion as well as stocks have broken on the down side but there is still some life left. Let’s get at today’s assessment.
When gold breached the $1,000/oz mark this February, the mass media were full of reports of unprecedented coin demand and long wait times for bullion buyers. You couldn’t open the paper without seeing a piece about the gold rush.
Gold’s performance in 2008 could look like a real yawner. After all, it only managed to eke out a 5.7% gain. Not the kind you’d normally brag about over cocktails.
Since gold has fallen so far, so quickly, for so little reason, the future for gold looks increasingly good, too, as the future of the dollar and the economy looks increasingly bad, and asset-type things (like houses and stocks) falling in value certainly looks deflationary, like the $30 trillion that has been lost in the world’s stock markets in the last year, which may have been what prompted Howard Ruff of the The Ruff Times newsletter to say, “It is axiomatic that deflation is the spawning ground for inflation, as the government doesn’t know how to fix deflation, depression or recession other than to throw money at it. The creation of all the money floating through the economy will eventually…
The short-term path of gold is still unclear says David Galland. But its a good sign that demand for physical gold soars when prices tip towards $750 an ounce. And this threshold is likely to creep upwards as the US dollar loses its worth, and foreign governments convert currency reserves for the precious metal.
The recent pull back in gold prices is seen as a buying opportunity by many. The demand is so high that the US Mint has stopped selling popular one-ounce 22-karat American Eagle bullion coins to dealers as they scramble to build the inventory back up. From Reuters:
“Nobody has the Eagles or the Buffalos right now. We bought 2,000 ounces late last week, and those were the last 2,000 ounces that we can find in the marketplace,” said David Beahm, vice president of New Orleans-based Blancard.
On August 11, the price of gold collapsed: down over $30. So did the price of silver, platinum, and palladium. A lot of people are asking why.
You can link the historic surge in gold prices starting mid-August 2007 to many apparently disparate things. Pick the right link, and you might be able to tell whether it’s worth you buying or holding gold today.