Tuesday, November 10, 2009, PM | Leave Comment
The price of gold briefly surpassed $1,100 an ounce on Friday, a record high – a new frontier for the yellow metal.
That means it has gone where no precious metal has ever gone before. Gold is the king of the precious-metal jungle.
It’s the lion of its own domain. [I wish I could say the same about my Web host. I am writing this in NotePad instead of the WordPress editor. My Web host is down again. So what else is new.]
The reason why Gold is way up in the stratosphere
Some precious-metal experts tell us the reason why Gold is way up in the stratosphere is: “Gold doesn’t disappear.” As opposed to what? Well! I guess as opposed to the mighty dollar. I agree with the experts.
The dollar can and has and will disappear. I agree with them because it has disappeared so many times from my bank account and for some reason that I will never know, it hates my wallet. The best reason I can think of is I sit on it. It seems like it’s telling me: “I get no respect.” Rodney Dangerfield never got it.
The same experts tell us the reason the price of gold has gone up so high can be multi-fold. A global frenzy fed by:
Multi billion-dollar hedge funds [have never known the cries of the poor. Run exclusively for the rich.]
Wealthy speculators [I second the motion – more like emotion to me.]
Governments of all the world [I knew they were up to something no good. The governments are of the rich, by the rich and for the rich.]
Other reasons the expert give for this rise in price are:
Refuge for nervous investors
Gold has climbed as the dollar has steadily weakened
Budget deficits have expanded in the United States and Europe
Central banks have continued to pump trillions of dollars into weak economies, creating fears of another asset bubble that will ultimately pop.
Finance newspapers and magazines report that:
Even the most bullish of gold lovers were surprised last week when the Reserve Bank of India stepped in and bought 220 tons of gold from the International Monetary Fund for $6.7 billion, a sign that other central banks might move away from dollar-denominated assets like Treasury bonds in favor of the precious metal.
India’s huge purchase means that gold will now account for about 6 percent of India’s $285.5 billion of foreign exchange reserves — up from the previous level of about 4 percent.
“We have money to buy gold,” said Pranab Mukherjee, India’s finance minister. “We have enough foreign exchange reserves.”
On Thursday, Sri Lanka’s central bank disclosed that it, too, was buying gold. How much? The report didn’t say.
A potential result
Buying gold by other countries has created a trend that could hurt the United States over time because it needs foreign bond buyers, especially central banks, to finance its growing debt. Gold closed at $1,095.10 an ounce on Friday, down from its Intraday high but up nearly 5 percent for the week.
In a Nutshell
Beware of the infomercials that have sprung the past year or so buying your gold. Do research and then more research to determine they will give you the best price.
Reading the news above and elsewhere, it seems that the United States has become a financial orphan of the world.
We have a saying in my mother tongue: “Stone drops from the sky only on an orphan’s head.” Has the United States, with its shoulders lower under the burden of debt, become that financial orphan?Facebook.com/doable.finance