Current Gold Price

[Lord Beria3]

As we have a oil price thread, I suggest we open a gold price (or "Fear" price) thread for those interested.

As we are UK based, I suggest we stick to sterling...

http://www.goldprice.org/spot-gold.html

Currently at its heights...

[RenewableCandy]

FWIW I think that's a good idea too.

[UndercoverElephant]

If we are going to do this then we must be aware of the difference between the price of gold in dollars, euros and sterling. Whilst I am expecting the price of gold to go up and stay up I am also expecting increasingly-wild fluctuations in the exchange rates between these three currencies as people weigh up the relative "fear factor" with respect to each of them. All of them are in trouble, but the trouble is different in each case. What is the same is that in each case there are general worries about unsustainable levels of debt denominated in those currencies, and fear about inflation. But the politics are different in each case.

The eurozone is in deep political trouble because it consists of a block of nations which share a currency but do not share full political union or any sense of national identity. So it is in much more immediate danger than the other two, because at any moment the political consensus (what is left of it) could break down catastrophically. The euro could basically cease to exist in its current form practically overnight due to a domino-effect following a Greek default.

Sterling doesn't have this problem. The UK is a secure political union with its own central bank and if push comes to shove it can simply print its way out of trouble. This would result in an effective devaluation of sterling, but not a total collapse. The fact that sterling is not the world's favourite reserve currency (anymore) also means that on the global scale of things such a devaluation would not threaten to bring the whole financial system as we know it down. Another factor is that the current UK government is an increasingly-unstable coalition which may itself fall apart in the next two years.

The dollar is the world's reserve currency. On top of that I believe the political and economic problems in the United States far exceed those anywhere else in the developed world. The problem here is that, compared to the rest of the developed world, the population of the US are accustomed to a ludicrously-high standard of living with respect to how hard they are willing to work. They are more deeply in denial than anybody else, lagging about twenty years behind everybody-else in terms of reduction of oil dependency and action on climate change. They also appear to have absolutely no idea how to deal with situation other than to print more and more dollars. The dollar, therefore, is the Big One, and when it goes down it will take the whole system with it.

[Lord Beria3]

Agreed - the dollar is key.

[UndercoverElephant]

It has busted through the $1550 mark at the same time, currently trading at £1553. Watch it go...

http://goldprice.org/live-gold-price.html

[Lord Beria3]

The end of the dollar reserve system is looming... this will be the trigger for billions to flow into PM's - if there is a physical demand spike, it will only fuel the demand into gold and silver.

It will make current prices look stupidly cheap.

[ujoni08]

Finally bought some gold this evening. Should have done it two years ago, when it was much cheaper. Certainly feels more tangible and secure than fiat money.
Jon

[UndercoverElephant]

http://www.theaustralian.com.au/busines ... 6070615849

"The market has been climbing a wall of fear, and the same things that have been driving gold higher the last two years are still in place," said Bill O'Neill, a principal with Logic Advisors.

The north face of the Eiger of Fear...

Silver futures benefited from spill-over buying, as investors unable to afford gold often purchase the grey metal instead.

The way this is going, copper is going to end up being classed as a precious metal.

http://www.sfgate.com/cgi-bin/article.c ... 141746.DTL

Hatred Of The Dollar From A Global Perspective

With a continued supply of unsettling economic data, it looks as though there are few forces left to strengthen the greenback. Interest rate decisions from the central banks of Australia, New Zealand, and England could work out in the dollar's favor, but for now it seems unlikely.

There is one beneficiary out of all of this weakening and uncertainty: gold. Gold rose to around 1.5 percent away from record highs today after more bad news about the state of U.S. unemployment pushed the dollar further downward. Demand for gold has increased as it is seen as a universal currency during times of economic unrest.

[UndercoverElephant]

This is also interesting, because the very first response is what I've been saying for the last few weeks. The author thinks that "reviving the gold standard would never work"...

http://blogs.forbes.com/advisor/2011/06 ... ever-work/

BUT....

Mr. Kleintop,

Your story about the vending machine dispensing gold coupons (1 oz. it sounds like) demonstrates that there actually IS a gold standard in place. Anyone can convert their paper money (or electronic money) into gold pretty much at anytime they wish. It is true that the US Treasury will not convert one’s paper into metal but I do not see how that alters the fact that US legal tender is fully convertible into any metal one wishes, including but not limited to gold.

These idiots can say "it will never work" till they are blue in the face...makes no difference to the fact that gold is readily exchangable for all paper currencies. Unless you make it illegal to buy and sell gold...

And...

http://www.examiner.com/stock-market-in ... not-euro-s

Dollar’s Ongoing Destruction... Buy GOLD Not EURO’s

You can almost smell the fear brewing before the stampede.

[JavaScriptDonkey]

The only benefit of a gold coin is that it can't be de-valued on a whim by central government. It's value is always whatever the market will pay rather than whatever someone says that it is worth.

The USD will remain the global reserve currency for so long as people need USDs in order to conduct business with the USG and American corporations/banks.

Probably best to think of USD in terms of temple coins.

[vtsnowedin]

I haven't bought any gold or silver as I think they are now both on a bubble that will pop sooner rather then later. I watched a friend loose his shirt twenty years ago on the last gold bubble scam. When people start cashing in their gold to buy food and heating oil then we will see it's real market worth. It will not be zero by any means but I expect it to be a lot less then $1500 USD per ounce.
It's greatest use to us may be its ability to show us the rise and fall of the various currencies as governments try different strategies to deal with peak oil. Surely some government will do a better job of dealing with the declining supply of oil and their currency and finances will be a winner in comparison to those that dwell in denial long after the facts are shown to be true.

[DominicJ]

VT

When people start cashing in their gold to buy food and heating oil then we will see it's real market worth. It will not be zero by any means but I expect it to be a lot less then $1500 USD per ounce.

The question is, in a future where you need to buy heating oil, will you get more heating oil for 1oz of gold, or $1500.

The last gold bubble popped because Reagans first priority was crushing the money supply.
Current government policy is to expand the money supply at any cost.

Not saying you're wrong, but there was a reason the gold price crashed in the 80's, and has been jumping since 2000

[UndercoverElephant]

The only benefit of a gold coin is that it can't be de-valued on a whim by central government. It's value is always whatever the market will pay rather than whatever someone says that it is worth.

Right now that particular benefit is worth...its weight in gold.

The USD will remain the global reserve currency for so long as people need USDs in order to conduct business with the USG and American corporations/banks.

I predict that the $US will cease to be the global reserve currency within a decade at the absolute longest and maybe much sooner.

[UndercoverElephant]

There is going to be a key speech this evening (UK time) by Ben Bernanke. Depending on what he says, the price of gold is likely to either drop sharply or take off again.

http://moneywatch.bnet.com/economic-new ... eech/1394/

Tim’s point about changes in the forecast is trying to get at whether the Fed sees the recent indications of weakness in the economy as a bump in the road, in which case it will soon pass, or a longer lasting problem that may require more Fed action. His second point is that even if the Fed concludes that more needs to be done, if the Fed is convinced it has squeezed nearly all of the economic gains out of quantitative easing already — that more would do little good relative to the risks — then the Fed still unlikely to provide more monetary stimulus.

So look for indications in the speech about (1) whether the recent weakness in the economy is long-term or short-term, and (2) if it’s long-term, whether the Fed has enough ammunition left to do something about it.

Let me add that I’ll also be looking for indications about (3) whether the Fed views the unemployment problem as mostly cyclical or mostly structural. If the Fed thinks it’s structural, then there’s not much it can do about it in any case. But if the unemployment problem is mostly cyclical, as I believe it is, then the Fed can potentially help.

Finally, (4) how worried is the Fed about inflation? The quoted remarks above about “lacking much experience with this option” indicate considerable uneasiness already, and this post at the blog at the NY Fed hints at emerging inflation worries. What signals will Bernanke give about these worries? Is he still confident the Fed can prevent inflation?

So one of two things is going to happen. If Bernanke appears to indicate that the current problems are temporary and confirms there will be no QE3 then the price of gold should fall sharply - and precisely how far it falls will be a guide to how many people have found his outlook credible. If he appears to be backtracking on this and indicating the problems are more serious and long-term then the opposite may happen.

[UndercoverElephant]

Fascinating bit of psychology here....

http://www.theglobeandmail.com/globe-in ... le2049366/

Five signs gold prices may have peaked

5. Everybody's Doing it

With just about any investment, widespread interest is a big sign that the price has peaked and may be set for a major slide. It's that way now with gold. You hear about it on TV, people are talking about it at parties and even those who generally have no interest in investments are buying it. Look at it this way: In 2005, only 16 per cent of the demand for gold came from investors (as opposed to industry) compared with 40 per cent now. That suggests a dangerously high level of speculation, which could quickly develop into a selling panic like the bursting of the tech bubble a decade ago.

Everybody is doing it, including investors and random people you meet at parties, therefore it is probably in a speculative bubble which is about to burst. Maybe, but what if there really is a long-term, unfixable problem with the economy which is now becoming so obvious that even random people you meet at parties are sufficiently aware of it and worried about it to have decided to buy gold? Wouldn't that also mean that everybody should be expected to be doing it?