Gold price facts and milestones on road to $800

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profette_IHB

profette_IHB

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<p>The following are <a href="http://uk.reuters.com/article/businessNews/idUKL2876119120071102?pageNumber=1">key dates</a> in gold's trading history since the early 1970s:</p>

<p>* August 1971 - President Richard Nixon takes the dollar off the gold standard, which had been in place with minor modifications since the Bretton Woods Agreement of 1944 fixed the conversion rate for one Troy ounce of gold at $35.</p>

<p>* August 1972 - United States devalues dollar to $38 per ounce of gold.</p>

<p>* March 1973 - Most major countries adopt floating exchange rate system.</p>

<p>* May 1973 - United States devalues dollar to $42.22 per ounce.</p>

<p>* January 1980 - Gold hits record high at $850 per ounce. High inflation because of strong oil prices, Soviet intervention in Afghanistan and the impact of the Iranian revolution, which prompted investors to move into the metal.</p>

<p>* August 1999 - Gold falls to all-time low at $251.70 on worries about central banks reducing reserves of gold bullion and mining companies selling gold in forward markets to protect against falling prices.</p>

<p>* October 1999 - Gold surges to two-year high at $338 after agreement to limit gold sales by 15 European central banks. Market sentiment toward gold begins to turn more positive.</p>

<p>* February 2003 - Gold reaches 4-1/2-year high on safe-haven buying in run-up to conflict with Iraq.</p>

<p>* December 2003-January 2004 - Gold breaks above $400, reaching levels last traded in 1988. Investors increasingly buy gold as risk insurance for portfolios.</p>

<p>* November 2005 - Spot gold breaches $500 for the first time since December 1987, when spot hit $502.97.</p>

<p>* April 11, 2006 - Gold prices surpass the next big level of $600, the highest since December 1980, with funds and investors pouring money into commodities on a weak dollar, firm oil prices and geopolitical worries.</p>

<p>* May 12, 2006 - Gold prices peak at $730 an ounce, the highest level since January 1980, with funds and investors pouring money into commodities on a weak dollar, firm oil prices and political tensions over Iran's nuclear ambitions.</p>

<p>* June 14, 2006 - Falls 26 percent to $543 from its 26-year peak after investors and speculators sold out of commodity positions.</p>

<p>* Nov 2, 2007 - Spot gold hits a 28-year high of $807.30 an ounce.</p>

<p>(Source: GFMS Ltd., World Gold Council, Commodity Research Bureau and Reuters database)</p>
 
<em>>>* January 1980 - Gold hits record high at $850 per ounce. <strong>High inflation because of strong oil prices</strong>, Soviet intervention in Afghanistan and the impact of the Iranian revolution, which prompted investors to move into the metal.</em>





Not to threadjack, but doesn't that just tell you how absolutely wrong it is to measure inflation without including the cost of oil?
 
<em>"Not to threadjack, but doesn't that just tell you how absolutely wrong it is to measure inflation without including the cost of oil?"





</em>I wouldn't consider this a threadjack because it brings up a good point. More importantly what would the 3.9% GDP look like if you factored in oil? Courtesy of <a href="http://bigpicture.typepad.com/comments/2007/10/i-call-shenanig.html">Barry Ritholtz of The Big Picture</a> and Bloomberg for this:





<img src="http://bigpicture.typepad.com/photos/uncategorized/2007/10/31/price_deflator_2.gif" alt="" />
 
IMO, the best measure of inflation is the increase in money supply, maybe as indicated by M3. Price inflation is a symptom of monetary inflation and does not necessarily correlate on a one to one.
 
<p>I can't read this graph. What is the circle at the bottom? </p>

<p> Is the line where the index would be if you did include gold, namely down?</p>
 
lawyerliz - GDP as currently published is adjusted by an inflation measurement called the PCE deflator. I am not sure but it seems the price of oil is not included in the PCE deflator. It most definitely is not included in the CPI, (consumer price index). The graph shows what GDP would be if oil were included in the PCE deflator. It is saying that GDP would be less that 1%.<p>


To put things in even better perspective: the PCE deflator included in last weeks published GDP number was 0.8%. Or the inflation rate used to figure GDP was 0.8% annually. And published CPI was, IIRC, a little over 2%. Why the 1.2% descrepancy? Because PCE and CPI are measured differently. In my opinion, overall price increases are probably closer to 5% to 10%, which if used to figure GDP would create a negative number.
 
<p>I agree, and I meant oil, not gold, obviously. </p>

<p>So oil isn't included and house purchases aren't included, and there's this birth/death thing: all of it adds up to the fact that this figure has become worthless.</p>

<p>Just a whole lot of boo-boos, or---conspiracy, anyone?</p>
 
Anonymous - The federal reserve stopped publishing M3 awhile back. If you google shadowstats, you may be able to see a better calculation than the fed ever published.
 
The World Melts for Gold

Futures in China, an ETF in India Are Part of the Frenzy



<p>http://online.wsj.com/article/SB120069299587601337.html?mod=home_we_banner_left</p>
 
<p>Good stuff, ukyo116. I think Mike is hard of hearing or at least unable consider different points of view. Peter is right on with his 5 year timeframe. Thanks.</p>

<p>Interestingly enough, this video was posted by an Inland Empire Realtor who seems to have stopped drinking the Kool-Aid and also claims Crash Proof as his favorite book.</p>
 
<p>I don't know if anyone else watches the price of gold, but I want to go out on a limb here.</p>

<p>IMO, gold is not becoming more valuable as the price goes up. The price of gold now is reflecting the expectations of the devaluation of other assets in the future, ie. housing, stocks, coporate bonds, all paper assets. And is also reflecting the expectation of the appreciaton of real assets such as oil and commodities.</p>

<p>Like a three bedroom, two bath home is still a three bedroom, two bath home no matter the price, a ounce of gold is still an ounce of gold and retains the same amount of usefullness or uselessness, no matter the price.</p>
 
Awgee....I have to agree with you. Other than owning gold what other ways do you think is good to be involved in the gold play? Mining and Exploration companys?



Also...i think you can take the gold play and expand it to other precious metals as well. Silver, Platinum, and Uranium (not a precious metal) have all done extrodinarly well over the last couple of months.
 
My spouse asked me to invest in gold when stock was performing very poorly the last 9 months. Would this timing be too late already? Where should I invest a huge sum of money. Smith Barney currently is managing it for be for about a 1.5% fee in a diversified portfolio.
 
bkshopr....not sure I would put it all in gold. Look at some safe fixed income investment vehicles like bonds or t-notes. Also, you can look at preferred stock. I purchased some preferred GS.A a few weeks back and it's yielding around 7.5% and matures in 2yrs I believe.
 
<p>Bk, you could always buy some BRK.A shares. Can't really get more diversified than that.</p>

<p>Of course the $4500 price swings might make you a bit nauseous </p>
 
1.5% mgmt fee for a diversified portfolio. WOWzers. bkshopr -- have you compared the performance of what smith barney has put you in relative to say the vanguard balanced index? those are crazy fees. something wild i just thought about the other day, if you had invested just in 30-yr treasuries back in the mid-80s, those had a yield >15%. you would have outperformed the s&p on avg by 200 bps a yr. and that's essentially risk-free, without enduring numerous heartache-inducing bubbles and bursts. plus you've got several more yrs on those bonds vs the poor outlook for equities over the short and medium-term. who would have thought???
 
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