$1,190 Breached, John McClane Summoned To The Scene

At this point there is little sense in putting up any more gold charts. It is pretty clear what is happening: John McClane and Samuel L. Jackson are waiting for the next phone call with detailed instructions from Bernanke on how to short the dollar as the kleptocrats haul the 33 Liberty Street gold stash using garbage trucks.

And gold is now trader mania 101, from Dow Jones:

Futures traders are piling into gold futures markets around the world, lured by the luster of record-high prices in the precious metal.

Metals trading at CME Group Inc.'s (CME) Comex exchange, home to the benchmark gold futures contract, has surged 43.5% this month over October levels as participants ramp up activity and more international investors jump into the market, according to exchange officials.

Gold markets operated by NYSE Euronext (NYX), the Tokyo Commodity Exchange and the Thailand Futures Exchange have also registered a bump in trading over the past weeks.

"The product has more eyeballs on it," said Joseph Raia, CME's managing director of energy and metals. "We're seeing a lot more focus on that marketplace from all aspects of the trading community."

A conflagration of factors has driven up the price of gold in recent weeks, with February-dated contracts at Comex setting a fresh record of $1,189 a troy ounce around midday Wednesday.

Gold has soared as central banks, led by India, began building their gold reserves this month in a move to diversify away from a weakening dollar, while investors seek protection from potential inflation in a low interest rate environment.

Debate among Federal Reserve officials--highlighted in the minutes of the latest monetary policy meeting--over whether to intervene in asset price bubbles drove more activity in the market this week.

Meantime, recent buzz around the market has seen some wayward investors return.

"The crash in commodities markets last year really left a sour taste in a lot of commodities traders' mouths," said Rob Kurzatkowski, a futures analyst with optionsXpress (OXPS). "They were really hesitant to come back in the early portion of this year."

This especially is the case in gold, as the market has formed a base at the $1,000-an-ounce level. Traders were encouraged when the metal fell back from its mid-October highs but held around $1,025 in late October, Kurzatkowski said.

More international participants are entering the market as well. Raia said overnight trading in its metals products typically amounts to 15,000 contracts traded by the time he arrives at CME's New York offices in the morning, but lately that number has been around 70,000.

Gold's $1,000 milestone caught many investors' attention, but Raia said the late 2006 migration of Comex products to CME's Globex electronic trading platform has also helped build liquidity and made it easier for firms in Asia and other regions to trade.

CME's metals products last month accounted for about 2.2% of overall volume, with an average 239,000 contracts changing hands each day.

Metals made up only about 3% of CME's third-quarter revenue, but the contracts carry higher fees than other product groups, making them more profitable.

Other exchanges also are basking in gold's glow. NYSE Liffe US, which operates gold and silver markets, has seen a 20% rise in average daily volume from October to November.

Gold futures volume at the Tokyo Commodity Exchange has risen each of the last three months, with November trade on pace to top October levels. The Thailand Futures Exchange saw contract volume increase by more than ten times month-to-month, as open interest in its gold futures has nearly doubled from the beginning of the month to Tuesday.

Raia said CME is also looking to capture more of the gold trading that happens off-exchange after fallout from the credit crunch slowed trading in London's inter-bank gold market, which remains far larger than its on-exchange counterparts.

CME has introduced a gold forward contract to its ClearPort service, which clears such privately negotiated transactions, but Raia said that activity remains muted as banks work through technology issues.