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Gold Hits New Highs vs. Dollar, Euro, Sterling & Aussie as Oil Rises on Fresh Mid-East Tensions

Commodities / Gold & Silver Nov 06, 2007 - 08:23 AM GMT

By: Adrian_Ash

Commodities SPOT GOLD PRICES raced higher yet again early Tuesday, taking out a series of new 27-year highs above $821 per ounce for US investors and also made new highs versus the Euro, British Pound and Aussie Dollar.


Trading for the third session running above $800 per ounce, the Spot Gold Price in US Dollars has now outstripped the previous all-time top of Jan. 1980.

That peak managed only two days above the $800 level. After doubling in the preceding seven weeks, the Gold Market then dropped 25% by the end of Feb. 1980.

Back with today's action, Gold Priced in British Pounds hit fresh record highs above £393.50 per ounce – up by one-fifth in the last 12 weeks.

For Eurozone investors wanting to Buy Gold Today , the metal finally broke the high of May 2006 above €562 per ounce.

"Commodities are in a boom cycle right now, especially with the economic growth round the world in places like India and China ," says Tom Winmill, a manager at the $220 million Midas Fund.

"There's just not enough supply. It was easier to get a mine up and running in the 1980s. Today it will take a decade of environmental permitting before you can start."

On the political front, US nuclear air-carrier Enterprise is continuing exercises in the Persian Gulf after an Iranian general threatened an attack on the Straits of Hormuz – the world's busiest shipping lane for oil tankers – last week.

NATO forces killed dozens of Taliban fighters overnight in northwestern Afghanistan . Local reports say civilians were also killed. Across the border in Pakistan , meantime, protests continued against the Islamabad government's new martial law, designed to prevent a legal challenge to the regime of Pervez Musharraf, who seized power in a 1999 coup.

Former chief justice Iftikhar Chaudhry, now under house arrest, last night called for Pakistan to "rise up". The Karachi stock market, however, ended today little changed after dropping 5% on Monday.

Tokyo share prices slipped for the fourth day running to reach a seven-week low, while banking stocks in Europe capped three days of losses to hold the FTSE100 index 0.5% higher by lunchtime in London.

Crude oil meantime rose back above $95 per barrel ahead of tomorrow's weekly US inventory report (due at 10:30 EST ). Copper prices rose on news of a disruption to supplies from Peru . Wheat futures gained after the US government said the recent spell of dry weather has damaged young crops.

Global wheat stockpiles already stand at a 32-year low.

The US Dollar meantime sank to a new record-low on its trade-weighted index, falling to $1.4532 per Euro and $1.08 per Canadian Dollar.

The Loonie only reached parity with the US greenback a week ago. The Australian Dollar has also shot higher, gaining more than 6% against the US currency in the last 10 trading sessions.

"There has been a scramble for a creditable store of value," says Ian Mellor at Bank of New York Mellon, "so gold, commodities in general, and the currencies of their producers – items of tangible worth – have risen to the top of the market's shopping list."

Gold Prices continued to outstrip gains in even the strongest world currencies early Tuesday, however.

Versus the Australian Dollar, gold rose this morning above A$887 per ounce, a new all-time high. Measured in Canadian Dollars – the world's other leading "commodity currency" – gold today broke above C$760 for the first time since May.

The Canadian Gold Price has now risen 10% from the 12-month low it hit in July.

"Only one currency [has] total integrity," says Dr.Marc Faber in the latest edition of his Gloom, Boom & Doom Report – "gold and other precious metals.

"Gold remains my preferred investment. Particularly in a debt collapse, physical gold would shine, as people the world over would become extremely concerned about, not the return on their money (interest), but the return of their money.

"While I find the Gold Price to be currently somewhat overbought, I still think that gold will be one of the best investments over the next couple of years."

By Adrian Ash
BullionVault.com

Gold price chart, no delay | Free Report: 5 Myths of the Gold Market
City correspondent for The Daily Reckoning in London and a regular contributor to MoneyWeek magazine, Adrian Ash is the editor of Gold News and head of research at www.BullionVault.com , giving you direct access to investment gold, vaulted in Zurich , on $3 spreads and 0.8% dealing fees.

(c) BullionVault 2007

Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it.

Adrian Ash Archive

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