Friday, Oct 26, 2007
gold hits $778 an ounce
business day: Gold scales 28-year peak
Gold climbed to a 28-year peak on Friday and platinum traded just below an all-time high, as a record low dollar and lifetime-high oil spurred buying.
Posted by sold 2 rent 1 @ 01:59 PM (610 views) Add Comment
5 Comments
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1. dohousescrashinthewoods said...
Even in £ terms, gold is up 5% on a couple of weeks ago (regardles of the withering dollar).
Then again, the £ is down against the Euro, but still, it looks like gold is up more than the £ is down.
2. planning4acrash said...
Anyone know about bullionvault? Is it really the only place to speculate? Is it secure? Are you protected if they go bust?
3. drewster said...
There are plenty of other ways to invest in gold. One popular way is to buy shares in gold-mining companies. If picking the right share seems tricky, you could invest in a gold-miners fund such as Merrill Lynch Gold & General. If the price of gold keeps rising then the value of mining companies should rise even faster. This is because the mining costs are fixed: supposing it costs a company $600 per ounce to extract the gold from the ground, and the gold price is $700, then that's $100 profit. If gold rises to $800 then the company makes $200 profit. So while the gold price only increased 14%, the share price increases 100%!
Another option is to buy into a gold-tracking ETF (exchange traded fund). These can be bought and sold through your broker just like shares. At least two are listed in London: GBS.L and PHAU.L. These offer the flexibility of keeping all your investments in one brokerage account.
There are minor risks associated with ETFs, for example if the providing company goes bust. Also the government might seize your gold, although that would be only a truly desperate measure. The following extracts from Wikipedia explain this neatly:
"Unlike physical gold bullion which is held in personally allocated storage, the investor will only become a general creditor if an ETF provider went into liquidation. Gold ETFs are a form of debenture."
"During an economic crisis Gold ETF assets may be subject to a compulsory purchase by governments, as seen [in the United States] in Executive Order 6102 of 1933 and the Gold Reserve Act of 1934."
BullionVault (and others) get around both these problems by giving you the option of storing your gold in London, New York, or Zurich. No prizes for guessing which location would be safest!
4. Little Professor said...
Damn, I think I missed the boat. I was hoping gold prices would dip temporarily around this time, which would have given me a buying opportunity.
5. sold 2 rent 1 said...
Little Professor,
Gold will correct sooner or later.
We are in Elliot wave 1 of this upleg.
See graph
http://goldprice.org/axstone/uploaded_images/xau_2_advance-709413.jpg
Wave 3 and 5 will be much bigger. Wait and buy on the dip.
The boat has not been missed.