Gold: The $1000 Sweet Spot

Recently Gold hit the $1000 mark.  This left many investors and speculators wondering if this lustrous yellow metal will have yet another lack-luster week.  The $1000 mark has been crossed a few times in the past two years, most memorably in March of 2008, when gold and silver hit new 25-year highs among economic instability and tension.  That was right before the recession hit full bore, and back when oil was over $140 a barrel.  Now gold has once again topped $1000, albeit quite timidly as it quickly sank back into the high 990’s, but it nonetheless hit $1000 on Monday.  This most recent stretch to $1000 is important because if the $1000 mark is topped and passed quite quickly, it could signal to investors that the precious metals market is still very much alive and well and that commodities could be on their way back up, preceding a possible jump in inflation after the major 2008 US economic stimulus bill injection of over $800 billion.

Many gold bugs have been yelling from the mountaintop for years that the price of gold would eventually top $1000 and move higher in a consistent drive for the $2000 mark.  Others have remained skeptical and believe that gold will not e able to hold onto the $1000 territory and will be quick to fall back into the low $900’s or even as far down as the $700’s or $800’s.  September will be a truly important month for gold and other precious metals.  Silver, once thought of as the “poor man’s gold”, is slowly beginning to erase it’s inflated gold/silver ratio position and has recently attained a 60:1 ratio with it’s yellow metal relative.  The US dollar has helped to drive up precious metals prices recently as well, since it has slowly been falling and, with any luck, once it reaches far enough below the 77 index level, will continue to show sharp declines.

Perhaps this most recent assault on the $1000 per ounce gold price is the collective global economic realization that the US dollar is not the robust, fail-proof currency after all.  Perhaps gold will continue to climb, fueling new insight into the argument that the US dollar will cease to be the world’s reserve currency in the not-so-distant future.  China has already begun deleveraging the US dollar though its own precious metals investments, but has not really shown any major interest in knocking the dollar off its pedestal in any real visible way.  It is very exciting, to say the least, for precious metals investors to watch the recent market developments unfold.

There is a lot of chatter going on in the precious metals chat rooms and forums regarding the developments in China and precious metals investment world wide.  This most recent climb above the $1000 for gold, if coupled with real investment demand and nervousness about the true state of the US and global economies, could mark the beginning of real change in the markets, and a new era for those looking to hedge against massive inflation and more economic recession and ruin.