"ALL CAPS IN DEFENSE OF LIBERTY IS NO VICE."

Monday, December 05, 2005

WHAT'S DRIVING THE PRICE OF GOLD UP TO 18 YEAR HIGHS?

Gold is getting dearer:
NEW YORK (AFX) - Gold futures continued their climb to settle at fresh 18-year highs Monday ... In addition, Merrill Lynch also noted that gold's surge is being propelled by a renewed surge in demand. ... "Gold remains bid, as strong fabrication demand bumps against very strong speculative interest," Merrill Lynch said in a note to clients. "Latest Commitment of Traders data show net speculative long positions have nearly tripled in the past four months to stand at 160,876 contracts. [and] ... boosted by weakness in the US dollar, continued strong investor demand and rising inflation fears."
Some think OPEC is driving the price up. In fact, the entire GOLD SECTOR is heating up with acquisitions, too. THE SCOTSMAN put it this way:
GOLD and other precious- metal prices have hit fresh highs as investors try to protect themselves against inflation and currency declines. ... A "commodity boom" has seen gold rise as far as $508.50 an ounce, its best since 1983, before giving up some gains to trade at $506.66. Platinum prices are near 26-year highs, while silver set an 18-year best.
LET ME BE THE FIRST TO SUGGEST THAT THE SURGE IN GOLD HAS EVERYTHING TO DO WITH HEDGING AGAINST AVIAN FLU. Currencies - especially Asian currencies - and businesses and investors positioned chiefly in Asia are PROBABLY hedging their bets in case Avian Flu SHUTS DOWN Asian businesses for a year. In other words: it's a flight to quality/safety, BUT NOT FROM INFLATION FEARS - FROM PANDEMIC FLU FEARS. If this is true, then I'd expect GOLD to go through the roof when H5N1 is confirmed to have become H2H. Oil will plummet as demand plummets. And there will be a real estate glut too. Brace yourself. Be prepared. Get Tamiflu. Get facemasks. Eat reishi and shittake mushrooms and kimchi. Buy Sambucol. And buy gold.

MORE HERE; excerpt:
The federal authorities are preparing to face a possible avian flu pandemic in the United States by contemplating a worst-case scenario, under which more than 92 million people will become ill in the space of four months, US Health and Human Services Secretary Mike Leavitt said.

8 comments:

Anonymous said...

interesting hypothesis...except if the bird flu hits hard its gonna lead to a economic crisis - travel industry hemmoraging, diminished trade and price deflation...gold is a hedge against rampant inflation...people are buying gold because worldwide the major currencies are all at historic low interest rates...the real value of currency and the wages of people who work in those areas is falling vis a vis gold

reliapundit said...

if several asian economies COLLAPSE, then what good is their currency!?

exactly zilch/bupkus/ZERO.

so folks are buying gold, which had intrinsic convertible value.

inflation is LOW.

gold is rising; the currencies are not falling.

gold is in GREATER demand than currency.

a flioght to safety.

from FLU.

look at the timing of the rise of gold.

coincidence!?

nope.

an avian hedge.

Anonymous said...

Gold has been going up because Indians and Chinese - who are large consumers of gold for jewelry - have much more disposable income than they did 10 years ago.

Its simple supply and demand - not bird flu speculation. The gold traders will have plenty of time to make money on that if and when it happens.

reliapundit said...

coincidentally china is "ground zero" of bird flu. india is in the neighborhood.

the newly rich could buy other things: like tv's fridges cars.

the newly rich indians and chinese are not making the market.

glad you admit that chinese gold buiying is driving up the price.

Anonymous said...

Coins are my passion. I love to look at them and hold. I think about the history of the coin in hand. Who used it at one time? Where has it been? Did this Morgan dollar actually participate in a poker game in the old west? Did someone get shot for cheating? Its fascinating when you consider this type question. So much history in a litle piece of metal.

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