Gold prices rallied to record highs above $1,600 an ounce Monday on fears that debt problems in Europe and the United States may spiral into a global crisis.
Gold, typically seen as a safe haven in times of economic trouble, has risen 8 percent in 11 days as President Barack Obama and Congress have failed to reach an agreement to raise the nation’s $14.3 trillion borrowing limit. With the clock ticking toward an Aug. 2 deadline, investors have turned to gold at the expense of riskier assets such as equities and commodities.
If Glenn Beck wasn’t such a moron, I’d say this was all part of his plan. I mean, creating intense government distrust to the point where it almost causes the United States government to collapse, thereby sending the price of gold through the roof? That’s a James Bond villain, right there. But more likely, Beck is just a symptom of a culture that’s willingly creating a gold bubble. Let’s hope it doesn’t drag us all down when it bursts.
Sounds like a good time to short gold futures…
#ifyoucantbeatthemjointhem
Failure to raise the debt ceiling will, all by itself, likely lead to a 3-5% devaluation of the dollar. Business LOVES that because it makes their products cheaper in other countries. No, business doesn’t care that it makes your overseas vacation more expensive; they hope to completely eliminate the silly concept of paid annual leave by 2020 anyway, and will deny that it ever existed.
If inflation does indeed exist, then $1600/oz is not an all time high.
Using an inflation calculator we find that gold in 1980 reached $850/oz which in 2010* dollars would equal $2219.
2011 isn’t over yet so the inflation rate hasn’t been calculated.
@3 – Sounds like socialist math, to me.
Was this posted in the future?
Not every price fluctuation is a “bubble”.
When you write that you’ve read and understood Ellen Hodgson Brown’s book _Web of Debt_, researched the history of the Federal Reserve, paid attention to what international bankers and speculators have done to other countries’ currencies, leading to inflation and social unrest, I’ll take you seriously. Screaming and pointing fingers at ancillaries or pundits rather than the actual entities at fault makes you appear buffoonish.
I’ve always found him to be more like Professor Harold Hill from the Music Man than a bond villian….but yeah, it does make him seem like Auric Goldfinger….
If the dollar collapsed, what are all those people going to actually *do* with gold anyway? Can’t eat it. I certainly wouldn’t accept it to fix their freakin’ bicycle if they offered.
Anyone know a place to sell gold in Seattle where you are (less) likely to get ripped off?
@13, check out jewelry stores and (hard as it is to believe) pawn shops. Coin dealers are typically the biggest rip-off. But be sure to get a lot of quotes – you’ll get a different price from everyone.
@14:
Even more so in the case of the coins being sold by Goldline (the site for which Beck has been shilling), for the simple reason that: A. of all) they’re not bullion, which is the only sort of precious metal one should be buying if they’re doing so as an inflationary hedge; B. of all) the coins Goldline sells are fairly common denominations and have no numismatic value to a collector, which is the only thing that generally gives collectible coins any significant value above-and-beyond the actual value of the metal they contain (and which would completely disappear the second one had to melt them down to extract their commodity value), and; C. of all) the mark-up Goldline charges on the coins is so high above the “melt value” that basically buyers have effectively lost whatever face-value the coins themselves might actually have the moment they’re purchased.
Jess Bachman from wallstats.com created a nice graphic that explains the scam a while back:
http://www.ritholtz.com/blog/wp-content/…
@14, in Seattle, go to Northgate Coin Shop, 539 suite G NE Northgate Way, across the street from the Chase bank branch. I am a frequent customer of NGC and have bought and sold gold and silver there.
Thank you zombie eyes @ 3.
Your eyes may be zombies, but yer brains seem quite intact.
I love pointing out to people that gold still isn’t as valuable as it was 30 years ago…that if you bought gold back then as a hedge against hard times, you’d still be out money. Gold investors are only marginally less financially literate than chronic lottery players.
So you’re saying I should get my ass down to the pawn shop now and unload all that crappy QVC jewelry I’ve gotten over the years for b-day and x-mas presents?
Cool!
@12: Since gold can’t be faked or forged, gold would retain value in the event of hyperinflation. I recall stories from the 1923 German hyperinflation of people trading unopened sardine cans (even though the sardines inside were… no longer edible), and black market prison economies are similarly based around intact packs of cigarettes. Any durable commodity will do as a makeshift barter currency, although a commodity that can be split into smaller pieces like gold will command higher barter value.
Although, with that said, current gold prices are CLEARLY FUCKING INSANE. Even if the US were on the verge of a dollar hyperinflation, gold is a horrible value proposition right now.
Bubbles only cause widespread economic damage when the overpriced assets are bought with borrowed money. It’s the suddenly unpayable debts that drag down the economy, not the price drop in itself. I haven’t seen any indication that the gold bugs are buying on margin, so they’ll be the only ones fucked when the bubble bursts.