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Gold price
soars as shares plunge
by The Sunday Telegraph (Australia)
THE 21st-century gold rush is gathering pace as
stock markets around the world continue to
plummet.
While the Dow Jones Index closed at its lowest
level in six years on Friday, investors worried
about the global recession were piling into the
precious metal, which broke through the
$US1000-an-ounce barrier for the first time
since March last year, closing at $US1001.80
The Perth Mint, Australia's biggest wholesaler
of gold bullion bars and coins, is experiencing
such unprecedented demand that it has been
forced to ration its sales for the past three
months, suspending sales of all gold coins and
bullion bars and only selling one-ounce gold
coins.
"We are still struggling to meet demand," Perth
Mint CEO Ed Harbuz said.
"But we can still service customers who want to
buy gold one-ounce coins, or buy larger amounts
and have us look after it for them in our
depository."
Mr Harbuz says some customers have bought tonnes
of gold at $32 million a tonne, or numerous
400-ounce bars, which "look like gold bricks",
at $400,000 each.
"Traditionally, the biggest driver of gold
demand is jewellery," Mr Harbuz said. "But not
any more. Today, it's all about the financial
crisis and wealth preservation."
Perth Mint's sales were up 194 per cent in the
December quarter, compared to a year earlier.
Many experts expect the price of gold to rise
substantially over the coming months and years
as more people want to put their money in a
tangible asset, rather than stocks and shares
whose value can literally vanish.
More than $834 billion, or 51.1 per cent, has
been wiped off the value of the Australian stock
market since it peaked in November, 2007.
Meanwhile, gold has risen by 72 per cent.
Although the gold price is typically quite
volatile, charts for both the long- and
short-term show a steadily rising price.
"In Australian dollar terms, gold was trading at
$A950 in late September, but it has risen to
$A1540 today," said Gavin Wendt, of analyst Fat
Prophets.
"We expected it to go above $US1000 at some
point in the next few months, but didn't expect
it to happen quite so soon."
Peter Schiff, the US analyst who predicted the
credit crunch as long ago as 2006, is advising
his clients to buy gold and predicts that the
gold price and the Dow Jones Index will
eventually reach parity.
"If you say that each point in the Dow is a
dollar, then I think that it will equal out over
the next few years," he said.
"Whether the Dow falls to 5000 and gold rises to
$5000 an ounce, or it's higher or lower than
that -- either way, it will reach parity at some
point." |