Thursday, 13 March 2008

Gold reaches $1000 an ounce

gold ingots - Credit Suisse

Concerns about a possible US recession are seeing investors buy up refuge commodities such as gold as an alternative to equities or the greenback.

Since the January the value of gold has increased by 20%, following a rise of 32% last year.

This price behaviour cannot be explained by either scarcity or increased demand of gold as a metal, but only due to increase demand a means of storage of value. Gold is increasingly used as a hedge against global inflation and unreliable equities. Its trade grown immensely since the introduction of exchange traded funds (ETFs).

Is the increasing uncertainty about the economy in the US and in a number of European nations leading to a para-gold-standard age through the back door?

If the fears regarding these economies are not placated through good governance, then there is a lot more space for the price of the yellow metal to go up.