glittering record price
Gold futures surged to a record
Tuesday as traders bet that rebounding oil
prices will keep boosting demand for the
It's the stuff of western dramas where rugged
men went looking for it in the mountains. It's
the shiny metal used in fancy jewelry, the
highest honors for sports and the bars tucked
away in heavily secured safes. And these days,
gold's appeal as a safe-haven investment has
carried it to record prices.
Gold futures surged above $880 Tuesday to their
highest level ever, not accounting for
inflation, propelled higher by rising oil prices
and a weak U.S. dollar.
An ounce of gold for February delivery climbed
as high as $884 on the New York Mercantile
Exchange, topping by almost $10 its previous
record of $875 set in 1980, and later settled at
$880.30, up $18.30. Gold for January delivery
was close behind at $878.00.
Market analysts who have watched gold's ascent
weren't surprised that gold reached a high.
"I'm telling my friends," said Ashraf Laidi, an
analyst at CMC Markets. "I've told them for the
past three years to invest in gold."
Still, when adjusted for inflation, gold remains
far short of the jaw-dropping levels of 28 years
ago. An ounce of gold at $875 in 1980 would be
worth $2,115 to $2,200 today.
Gold that cost $650 an ounce in January 2007 has
soared on rising oil prices, the falling U.S.
dollar and global unrest.
"We are still getting a fairly even mixture of
buyers and sellers," said Mike Anderson, a
salesman with Tulsa Gold & Silver. "A lot of
sellers who maybe have been holding gold for 15
or 20 years, now it's finally giving them a
But Anderson said he's also seeing gold buyers
who are "coming in with a fear of the supbrime
mortgage, the government printing too much money
and the price of oil."
A lot of people still feel that gold is a good
investment, Anderson said, noting that gold has
gone straight up since August 2007.
Gold prices normally take a breather in the
springtime, and Anderson said he suspects that
will be the case in February or March. But he
also thinks that gold will be in the $900s this
"Gold should be in everyone's portfolio, but it
shouldn't be a majority," Anderson said. "I sell
gold to people, but I never recommend it should
be the majority of their investment. It has its
own place in your portfolio."
Jim Eagleton, vice president of investments for
A.G. Edwards & Sons Inc. in Tulsa, said his
phone has been ringing with people wanting to
"Historically, it's been a poor investment
unless you happen to hit the right period of
time when it makes these gigantic spikes," he
said. "Inevitably, the advertisers start
marketing gold bullion and gold futures and gold
coins after the gigantic run."
He noted that in the last 20 years, gold has had
five good years, including 2002, 2003, 2005,
2006 and 2007.
"If you bought gold 20 years ago, you would have
made an average annual compounded return of 2.2
percent," Eagleton said.
Eagleton, who thought gold was overpriced a year
ago, said he wouldn't put money in gold at
"I'm not smart enough to call the top, but the
best way to consistently lose money is to buy
last year's home run," Eagleton said.