Frank Tang and Jan Harvey, Reuters Published: Monday, November 16, 2009
Reuters Gold rose to record highs on Monday above US$1,140 an ounce as the dollar extended losses, increasing bullion’s appeal as a hedge against the falling U.S. currency.
NEW YORK/LONDON — Gold raced to a record high above $1,140 an ounce Monday, gaining 2% as a weakened dollar boosted funds’ risk appetite for investments across the board.
Gains in gold spurred interest in other precious metals, with platinum, palladium, silver and rhodium all hitting their strongest levels in more than a year, largely driven by a tumbling dollar. “A weak dollar has increased the demand of risky assets of all kinds, including hard assets. It is clearly reinforcing the commodities bull market,” said James Steel, chief commodities analyst at HSBC.
“In this atmosphere, it is almost impossible for gold to resist appreciating along with everything else,” Mr. Steel said. Year to date, gold has risen 30%, outperforming the broad-based equities S&P 500 index, which has gained 23% over the same period. Gold’s ascent was driven by a combination of dollar weakness, inflation worries and doubts about a nascent economic recovery, analysts said.
Spot gold reached a record $1,143.25 an ounce, and was at $1,142.70 an ounce at 2:12 p.m. EST, against $1,118.50 late in New York on Friday. U.S. December gold futures settled up $22.50, or 2%, at $1,139.20 an ounce on COMEX division of NYMEX. Gold’s gains were momentarily capped as the dollar managed a brief rally off lows after U.S. Federal Reserve Chairman Ben Bernanke said the Fed was attentive to changes in the currency. But as investors digested his comments, they decided there were no signals of change to monetary policy. Rising equity markets also boosted the appeal of assets seen as higher risk, such as commodities and higher-yielding currencies.
U.S. stocks rose almost 2%. Other commodities also rallied, with the Reuters/Jefferies CRB index up nearly 3%, as oil rose more than $2 toward US$80 a barrel, while base metals such as zinc and copper also climbed. Gold now looks poised for further gains, analysts said, with a number of call options, or rights to buy, being placed at elevated levels on U.S. December gold futures.
“There is no reason why over the next few days it can’t have a push towards that $1,200 mark before we get to the December expiry for the options positions, which everyone’s looking at,” said Tom Kendall, precious metals strategist at Mitsubishi Corp. “There is a large bunch of US$1,200 calls December expiry, which are acting as a bit of a magnet for prices at the moment.”
Gold’s gains lifted other precious metals, with silver reaching its highest since July last year at US$18.43. Platinum hit US$1,451.50 an ounce, its highest since September 2008 and palladium reached its strongest level in 15 months at US$375.50.
Later, platinum was at US$1,444.50 an ounce against $1,390, while palladium was at US$374 against US$353.50. Rhodiumhit a 13-month high at US$2,375.
Silver was at US$18.41 an ounce against US$17.41.
The problem for everyone who earns, saves and invests dollars is that the most prominent “solution” now being recommended around the world is THE REPLACEMENT of the U.S. dollar as the world’s reserve currency — a move that I’m convinced will make your money worth a fraction of its current value!
China is demanding that the dollar be replaced: China’s central bank governor, Zhou Xiaochuan says …
“The costs of a dollar-dominated system to the world may have exceeded its benefits. The dollar should … be replaced by a new global reserve currency.”
The United Nations is demanding A NEW GLOBAL CURRENCY: Dr. Detlef J. Kotte, director of the UN’s Macroeconomics & Development Policy, says …
“Replacing the dollar with an artificial currency would solve some of the problems related to the potential of countries running large deficits and would help stability.”
And in a monumental new report, the UN recommends the establishment of “ … a new ‘Global Reserve Bank’ or a reformed IMF to issue an ‘artificial’ reserve currency …
“ … the global currency would be backed by a basket of currencies of all the members.”
“The U.S. dollar is and has been the world’s reserve currency, the world’s medium of exchange. That’s in the process of changing.
“The pound sterling … lost 80 percent of its value … losing its status as the world’s reserve currency.”
Here are the facts…
Back in 2001 you could buy an ounce of Gold for $250. Today, it takes about $950 to buy an ounce of Gold. And the Euro has tumbled almost as much: From €250 to €680 for an ounce of Gold.