Price of Gold in Dollars (Record High), Euros (-10%), and Yen (-10%)

The price of gold closed at record highs today exceeding $1,040 per ounce throughout the day.  While gold is at record highs in dollar terms, the commodity is still down 10% from its highs when priced in Euros and Yen.  As shown in the charts, the price of gold is up considerably over the last five years, but the recent run has only been strong in dollar terms.  This indicates that the strength is solely a function of a weaker dollar rather than any real pickup demand.

 
 
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Comments

[Jeff Diercks]

Great point! There is no demand pick up for gold the metal and its use in jewelry and other industrial products. Consumer demand remains weak.

It is purely speculative demand and its inverse relationship to the weaker dollar that is driving gold prices higher.

[Rick]

Let me counter with something else. How have all the charts performed since March 2008? Gold priced in anything other than Yen, US$ and US Bonds surged well past its 2008 high already. So Gold in US$ terms is just catching up with those other charts, which were weak in the preceding months when everything recovered.

Gold's run is just starting. Few folks understand it, much less own it.

[Andy]

Is that not exactly why we own Gold. To protect purchasing power against a spendthrift government.

[clif sloan]

If the increase rises as predicted look for the government to attempt to regulate ownership.

[Steve]

If you believe that the USD is a poor, misunderstood currency unfairly disparaged by naysaying gloom-and-doom economists... then buy the dollar and sell gold.

But know that gold is and has always been "money" whereas currencies represent merely a temporary substitute of transient value. As a medium of exchange, the dollar is only one of dozens of things that have been used in this role only to be eventually replaced over the centuries.

If you understand the Fed's mission to inflate away the purchasing power of dollars in the hope of having any chance of paying down the federal debt... then ignore gold (in any currency terms) at your own peril.

[ji]

The ancient saxons, romans, chinese,
etcetera revered gold. Not just for
its functionality but also for its
use as a means of exchange. It is not
going to go away. It will always have
value which is more than can be said
for the Dollar or the Pound.

[Mike Peterson]

The purpose of "all time highs" is to reduce gold demand. At the present time investment demand from China and the rest of the world is rapidly expanding. As inflation actually materializes that demand will become insatiable. When inflation is high and prices are going parabolic, that will be the time to get out of gold. Look at the charts from 1977-1981 for a guide.

[Peter Strickler]

I'd rather own an australian miner. Not only do you own the commodity, you have exposure to one of the last decent currencies in the world. both will appreciate faster than gold and pay interest too.

[Richard A. Lawhern, Ph.D.,]

If other readers will forgive a skeptic... I'm old enough to have seen comments very similar to this thread, before. In 1980-82, gold bugs were predicting $1000 per ounce gold and the collapse of the dollar. It didn't happen. But following the advice of folks like Howard Ruff left a lot of folks a good deal poorer at the end of the speculation than when they bought gold with both hands. Conditions are not the same now. Perhaps the gold bugs have a point. But before any of us put all of our wealth into an industrial metal surrounded by mythologies, I think the gold bugs owe all of us an explanation: Just what kind of world do they think we'll all be living in when gold becomes "currency" and almost nobody has enough to put food on their table?

[George Franco]

It is human nature to want everything going up and posivite. We are at a turning point in America. When housing continues to crash and unemployment is in the mid to high double digits the average American we are in a drepression that will takes years to just bottom out!!

[openhatch.myopenid.com]

Mr. Lawhern: does it matter what kind of world is imagined by those who predict the downfall of the Dollar's buying power? Nobody knows what's going to happen. But a lot of people have some very strong arguments, rooted in unprecedented facts - TRILLIONS of dollars printed in a very short amount of time, astronomically beyond any previous measure. Barring miraculously unpredictable intervention in previous cycles of cause and effect when large amounts of money are printed, the collapse of the Dollar is virtually inevitable. But no one knows, and beyond that knows what *might* take place with a (possibly) desperately weak Dollar. How would gold holdings empower people in such a situation? I've never heard the mechanics of that discussed - people simply forsaking printed money and bartering? Everything in US infrastructure is tied to paper money. No one knows what would happen, and they don't need to - all we need to know is that gold has thousands of years of history showing more durable spending power than vastly deflated fiat money.

[Lucy]

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[George Nelson]

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