Gold a go go
Thursday, February 19th, 2009
Without any great fanfare, gold is poised to break above $1000/ounce, right now at $986 after a steady drift upward this week. Maybe we’ll come in tomorrow AM and see new highs.
According to Bloomberg, The SPDR Gold Trust, a gold backed security, is now the seventh-largest holder of gold, after the International Monetary Fund and the governments of the U.S., Germany, France, Italy and Switzerland. As of yesterday that security had 1,008.8 metric tons. The unabating hunger for gold among currency-fearing investors is going to push SPDR holdings steadily up in the league tables of gold holdings, so that SDPRs now account of more gold than the reserves of the Central Banks of Japan and the UK put together.
$1000 is a big psychological hurdle and surpassing it will undoubtedly spark some headlines — maybe the cover of Business Week with a headline “How High Gold?” — but the historic high in dollars is $1030, reached last July. (Gold’s explosion won’t be over until Business Week’s headline is “Gold Back to the Future: next stop $3000?”)
More important than the $1000 hurdle, it’s important to know that gold is at unprecedented levels versus the Euro and Sterling, two currencies that being sucked into a whirlpool of capital flight.
What’s interesting about watching gold trade is that, historically, gold’s fan base is mostly freaks and black helicopter paranoids. “Gold bugs” are usually déclassé, moonshine and trailer parks to Wall Street’s Dom Perignon and Park Avenue. Once every hundred years, the crazy folks are right.