Tuesday, gold hit $1,199.30/oz. as Japan moves toward metals, away from being a tit of the U.S. The record high of gold’s value displays the record low of the U.S. dollar.
Spot gold hit a record high of $1,199.30 per ounce in the European markets, today, “as the dollar weakened and worries over Dubai’s debt woes eased”, Matthew Walls reports at The Wall Street Journal. “A weaker greenback tends to boost gold, as it and other commodities are priced in dollars around the world,” Julianne Pepitone adds at CNN.
“Other precious metals rose, as well. Spot silver rose 1.25% to $18.68 an ounce, spot platinum was up 1% at $1,464.50 an ounce and spot palladium surged 4% to $377.50 an ounce,” he adds, showing the continuing tailspin of the value of the U.S. dollar (USD).
“The [USD] weakened against a basket of currencies in the wake of policy comments from the Bank of Japan, adding to strong investment demand for the metal”—Jan Harvey reports at Reuters—following a Monday where “U.S. gold futures for February delivery on the COMEX division of the New York Mercantile Exchange were up $14.10 at $1.196.40 an ounce, having earlier hit a record $1,200.50”.
“China’s manufacturing grew at the fastest pace in five years,” Claudia Carpenter and Millie Munshi report at Bloomberg, also contributing to the fall in the USD. They add that China, Russia and India have all recently increased their holdings in gold.
Dubai World says it’s talking over $26bn of its near $60bn debt, “easing worries it would default on all of its debt”, Mr. Walls reports.
“With investor sentiment having quickly recovered from the Dubai World scare, gold should continue to draw investors seeking a hedge against inflation and a weaker [USD], analysts said,” he adds.
Last month, gold hit a then-record high when India replaced billions of U.S. dollars with gold. India and China have formed an economic alliance (BRIC) with Brazil and Russia to begin dumping U.S. monopoly money from their reserves toward hard reserves like gold. The USD’s saving grace, Middle East oil, is wearing thin as Middle East members of the Organization of the Petroleum Exporting Countries are conspiring with Japan and other countries to abandon the U.S. dollar. Iran has completely abandoned the dollar from the its reserves. Nine Latin American powers have approved a document to replace the dollar with a new intra-regional currency. Japan has neither the financial nor the political capital to further enable the losing proposition of the U.S. warfare-welfare State.
“Spot gold prices have jumped around 45% this year as of Friday’s close. In the past 5 years, gold has risen around 160%,” Brandon Clay writes at Seeking Alpha.
“So why is this important?” he adds. “The future of the global economy is in the East. Instead of multiple-trillion dollar debts, China, Russia, and India have currency reserves. These governments are slowly moving their reserves from fiat currencies like the dollar to more stable stores of value like gold. At the least, it’s a temporary sign that BRIC confidence is waning in the U.S. government’s ability to pay off debt. They are, in essence, shorting the U.S. economy and exploring other stores of value besides the dollar.