Why Is Gold at $1,000?

Yesterday Gold hit an intraday price of $1005/ounce. While not a record, it’s definitely a historical moment, with this event occurring for only the sixth time in history.

We can only speculate as to why the run up to a $1000 was so quick but some of the likely reasons are:

• The continued monetization of US debt and resulting devaluation of the dollar
• The ability for 1/6th of the world’s population (the Chinese) to now buy gold
• The Indian Wedding season is about to begin soon and this is when Indians start buying gold jewelery
• The Chinese government has been buying gold on the sly. Well maybe not so secretly. They are even encouraging their citizens to buy silver and gold
• The Chinese government just agreed to buy $50 Billion of IMF Bonds denominated in SDR (Special Drawing Rights), a mixture of various currencies, which might be a signal that the US Dollar is losing its status as the world’s reserve currency

The only question is whether this rally can last. In the long term, the answer seems obvious, but the short term is anyone’s guess. However, I think $1000 gold is here to stay.

Comments

[Roger Knights:]

Another reason is likely that news of Barrick's de-hedging leaked out. (Maybe the insiders who've been buying on the rumor will sell on the news.)

Sep 09 08:26 AM

[Roger Knights:]

Another reason is likely that news of Barrick's de-hedging leaked out. (Maybe the insiders who've been buying on the rumor will sell on the news.)

Sep 09 08:26 AM

[Mr_Nick:]

Depends on your point of view. At 2009 1oz = $1000, 2008 $1000 = 1.1 oz, at 2007 $1000= 1.42 oz.. The value of gold hasn't changed. A silver dollar get's you about 5 gal of gas, same as it did 50 years ago. Same comparisons can be made for the gold oz. What's changing is the Dollar value.

Sep 09 09:35 AM

[NUCLEAR1929:]

its not 1000 because people buy, notice, i dont say smart money or warren buffett, i say people

Sep 09 10:55 AM

[AndrewBaker:]

Gold is at $1000 because there's not much else safe enough to hold at this time, especially with the dollar going down; which itself will not only support the price but push it higher.

Sep 09 02:48 PM

[Keer-eh Khar:]

Gold is at 1000 again since this is just a stepping stone on its price to $3000/oz. by 2012-2015

Sep 09 09:25 PM

[Slvrizgold:]

Because the Govt and Wall St sucks, and all people LOATHE them, and wish they would die a slow painful death.

Sep 09 11:13 PM