RTE Morning Business News
Sep, 09, 2009 | RTE Radio
The price of gold has broken through the significant $1,000 barrier again and it is up nearly 14% this year. Gold prices are linked to the dollar and when the dollar weakens - as it is doing right now - gold tends to rise. The precious metal is looked on as a safe haven for money and this latest surge had been driven by speculators who want to avoid inflation eating up their assets' values.
Steven [sic] Flood is a director of the Goldcore company, which acts as a broker for anyone looking to buy or sell gold. He says the current gold rush may be indicative of the fact that the talk of green shoots of recovery may be a bit premature and says the world economy is still in a contraction phase. He says a lot of economists, bankers and investors are looking towards governments to see what fiscal stimuli they are going to continue to pour into local economies.
Mr Flood says that gold was trading at $425 at the beginning of 2005 and has since jumped to over $1,000, indicating that it is in a very strong upward direction. Mr Flood says that while the physiological level of it has been tested a few times, prices have pulled back and he says it has touched the €1,000 a few times recently. He says it is looking very strong technically and predicts that prices will continue to rise.
He says that many central banks around the world, who are sitting on a lot of paper dollars and who are quite worried, are currently in the market for gold as a hedge against the dollar. He explains that the fiscal stimulus plan being used by the US government in recent months has been to literally electronically print money. This leads to inflation fears for the dollar and this is a cause of concern for central banks who are holding a lot of the greenback. Investors are also adding gold to their portfolios as a hedging option.
