PERSPECTIVE: Gold price hits record US$1,780 per oz

I hope CMJ readers are not tired of hearing about the skyrocketing gold price. Every time we turned around in the last week, it seems to have hit another all-time high. Five days this month closing records were broken - Aug.1 ($1,623.00), Aug....

Topics

Commodities

I hope CMJ readers are not tired of hearing about the skyrocketing gold price. Every time we turned around in the last week, it seems to have hit another all-time high. Five days this month closing records were broken - Aug.1 ($1,623.00), Aug. 2 ($1,637.75), Aug. 3 ($1,669.25), Aug. 4 ($1,679.50) and Aug. 8 ($1,693.00)

Today's peak was almost US$1,780 per oz in early morning trading. That is not going to be the closing, however. Investors indulged in profit-taking before lunch, dropping the price down to nearly US$1,720. After mid-day the price began creeping back up, reaching slightly over US$1,740 per oz by the afternoon.

Up $50 an ounce one day. Down $50 another. It's a rollercoaster.

That rollercoaster gets its power from investors expressing their jitters about the U.S. economy. Yes, the United States raised its debt ceiling in time to avoid default after Aug. 2, but barely. The bill was passed in both houses and signed into law by the president only hours before the deadline.

Add to that the fact that Standard & Poor's downgraded the United States credit rating for the first time in recent history. The rating now stands at AA+ instead of AAA.

Analysts looking at the new S&P rating are speculating that the change was made more out of frustration with the partisan nature of the debate and last-minute deal rather than out of a fear that the U.S. will not pay its debts. Indeed, not other ratings agency has followed suit.

Meanwhile, as the gold price was rocketing to new price levels, the stock exchanges were moving in the opposite direction very quickly. The TSX composite index fell over 1,200 points since the end of July through Aug. 8, 2011. The index is showing signs of bouncing back today (Aug. 9). Long may the upward trend continue.

But when the stock markets go up, the price of gold goes down. That seems to be one truth we have learned from the modern global economy. Another is that the Internet has created investors who want their information in real time, and they make their buy and sell decisions faster than ever.

I'm sure miners wish they could get more gold out of the ground as quickly.

Comments

Your email address will not be published. Required fields are marked *

Mar 27 2024 - Mar 28 2024
Apr 08 2024 - Apr 09 2024
Apr 15 2024 - Apr 16 2024
Apr 16 2024 - Apr 16 2024