Gold Breaches Nominal High Of $1,500/oz; Inflation Adjusted High Of $2,400/oz Remains Long Term Target

Tyler Durden's picture

From Gold Core

Gold Breaches Nominal High of $1,500/oz; Inflation Adjusted High of $2,400/oz Remains Long Term Target

Gold has breached the $1500 level and reached new record nominal highs at $1,505.65/oz. Since yesterday it has gradually risen in all currencies and is approaching record nominal highs in all major currencies. Gold has risen to EUR1,037/oz, GBP920/oz, AUD1,412/oz, CHF1,344/oz and JPY124,640/oz, and is now not far from recent record nominal highs of EUR1,054/oz, GBP922/oz, AUD1,440/oz, CHF1,349/oz and JPY126,000.

Cross Currency Table

Given that all major currencies are becoming more debt laden by the day, gold’s finite currency credentials are again being appreciated. As ever it is very important to realize that gold is only at record highs in nominal terms and not in real terms.

Gold in USD and Gold in EUR – 5 Year (Daily)

$2,400/oz is the inflation adjusted (CPI) high of 1980 and given the very uncertain macroeconomic climate of today and concerns about the dollar and all major currencies, arguably even more uncertain than the 1970’s, the real high remains a very viable target.

It is important to remember that while gold has risen some 6 times in 11 years ($250 to $1500) it rose by 24 times in 9 years in the 1970’s – from 1971 to January 1980 ($35 to $850). This puts the recent reasonably gradual increase in gold prices in perspective and should give gold bears and top callers pause for thought.

Gold in Real Terms – Bloomberg Inflation Adjusted (CPURNSA)- 32 Year (Monthly)

Sharp falls of the dollar on foreign exchange markets could see a parabolic gold move and gold reach its real record high in the coming weeks and months. Should declining confidence in the dollar not result in sharp declines in the dollar than gold’s rise may continue to be gradual and steady.


(BBC) -- Gold price hits record at $1,500 an ounce

The gold price has risen above $1,500 an ounce for the first time after concerns about global economic recovery lifted the metal's appeal as a haven.

In trading in Hong Kong, gold hit a record $1,500.70 an ounce, which traders said was mainly a response to Standard & Poor's downgrade of US debt.

Silver also touched a 31-year high of $44.34 an ounce.

"In a word, sensational. Everything's feeding into this, sovereign debt, weak dollar, inflation," said one analyst.
But analysts were divided about whether the price could go higher and are waiting to see if trading in Europe and the US continues the momentum seen in Asia.

Jonathan Barratt, at Commodity Broking Services, said: "We often see a $20 rally after breaking a big number, then a pullback.

"We will see what Europe and United States do with this. $1,510 or $1,520 look possible, but prices are starting to look a little stretched up here."

Darren Heathcote, at Investec, said: "The market is so fickle at the moment and it wouldn't surprise me if we saw a sell-off."

Some market watchers see gold consolidating at its current level as it waits for the next reason to push higher.

Natalie Robertson, commodities strategist at ANZ, said: "I don't see prices convincingly past that level in the next few days unless we see something very negative, probably related to the eurozone sovereign debt.

"But we do see gold very well supported at the $1,490 level," she said .

Silver continued to soar, rising to a 31-year high for the fifth consecutive session.
Not only is silver increasingly seen as a haven, but there is also rising demand for industrial consumption.
"Silver is still in a clear bull trend that targets $50 next," said Taso Anastasiou, a UBS technical strategist.

(Press Association) -- Gold Price at All-time High

Gold has broken the 1,500 dollars-an-ounce barrier for the first time as fears over the global economy send investors flocking to safer investments.

The precious metal has hit a fresh all-time high in the wake of Monday's shock debt downgrade warning for America, which also resulted in silver prices reaching a 31-year record.

Standard & Poor's (S&P) sparked hefty share falls earlier  this week when it slashed its outlook on US government debt to  negative from stable.

The move added to continuing concerns over Europe's  sovereign debt crisis and rising global inflation, which has seen a flight to safety among investors.

The US dollar has also been under pressure since the S&P blow, further fuelling the rise in gold prices.

The record gold price helped mining stocks leap ahead on the London market, with shares in firms such as Rio Tinto and Anglo American as much as 3% higher.

The traditional safe haven has soared in value in recent years as investors have been spooked by economic uncertainty.

Gold eased back at the start of the year after a run of positive economic data, but has since bounced back due to gloomy global developments.

The US debt outlook downgrade compounded concerns  following political tensions in the Middle East and North Africa, Japan's crisis and more eurozone woes.

Ireland's rating was slashed to just above junk status  last week by Moody's, while Portugal is edging closer to a bailout.

S&P said on making its debt warning that there was a "material risk that US policymakers might not reach an agreement on how to address medium and long-term budgetary  challenges by 2013".

US Treasury Secretary Tim Geithner was quick to play down  the caution, saying the US would keep its triple A rating.
However, some experts believe that with the world's  biggest economy under pressure to cut its debt, the gold rally could see prices hit 2,000 dollars an ounce.

(Financial Times)-- Hedge funds surge to peak of $2,002bn

Assets under management in the global hedge fund industry have soared to an all-time peak, surpassing the pre-crisis high thanks to the strongest investor inflows in years.

The world’s hedge funds at present manage $2,002bn of client funds, according to Hedge Fund Research, the industry’s leading data provider.

(AFP) --Obama blames speculators for high gasoline prices

US President Barack Obama blamed oil "speculators" on Tuesday for soaring gasoline prices that risk weighing down the US recovery and could dampen his 2012 election hopes.

"It is true that a lot of what's driving oil prices up right now is not the lack of supply. There's enough supply. There's enough oil out there for world demand," Obama said at a campaign-style event not far from Washington.

"The problem is, is that oil is sold on these world markets, and speculators and people make various bets, and they say, 'you know what, we think that maybe there's a 20 percent chance that something might happen in the Middle East that might disrupt oil supply,'" he said.

"'So we're going to bet that oil is going to go up real high.' And that spikes up prices significantly," said the president, who recently launched his reelection campaign.

His comments came as oil prices rallied in New York, rebounding from the previous day's heavy losses as a weaker dollar boosted demand for dollar-priced commodities.

New York's main contract, light sweet crude for delivery in May, surged $1.03 to finish at $108.15 a barrel, even as US gasoline prices hovered just below the $4-per-gallon mark after rising steadily since late 2008.

"We're now in a position where we can investigate if there's unfair speculation. We're going to be monitoring gas stations to make sure there isn't any price gouging that's taking advantage of consumers," promised Obama.

"But the truth is that it is a world commodity, and when prices spike up like this there aren't a lot of short-term solutions. What we have are medium- and long-term solutions," he said.

Obama's Republicans foes have pounded him over the rise in fuel prices, accusing him of putting on hold new oil drilling that could eventually lead to lower prices.

(Reuters) - Twelve banks worldwide sued for manipulating Libor

A European asset manager has sued one dozen U.S., European and Japanese banks, accusing them of conspiring to manipulate Libor, a benchmark used to set interest rates on hundreds of trillions of dollars of securities.

Vienna-based FTC Capital GmbH and two funds it operates in Luxembourg and Gibraltar accused the banks of conspiring to artificially depress Libor, and limit trade in Libor-based derivatives from 2006 to 2009.

The defendant banks include Bank of America Corp, Barclays Plc, Citigroup Inc, Credit Suisse Group AG, Deutsche Bank AG, HSBC Holdings Plc, JPMorgan Chase & Co, Lloyds Banking Group Plc, Norinchukin Bank, Royal Bank of Scotland Group Plc, UBS AG and WestLB AG.

Libor, whose full name is the London Interbank Offered Rate, is a measure for rates that banks charge each other, and is used worldwide as a short-term rate benchmark.

About $350 trillion of derivatives and other financial products are based on Libor. Small changes in the rate can have large impacts on the amounts of interest that can be charged.

FTC said the 12 banks colluded to suppress Libor to make them appear healthier than they were, and take advantage of trading opportunities not available to outside investors.

"During the most significant financial crisis since the Great Depression, U.S. dollar Libor rates submitted by contributor banks did not vary markedly, nor did they increase or decrease sharply," FTC said in its complaint filed Monday in the federal court in Manhattan.

"In a market not artificially suppressed, Libor rates should have increased significantly during this period," FTC added. "In addition, because different banks were experiencing different levels of severe stress, the banks should have been receiving markedly different borrowing rates."

Citigroup spokeswoman Danielle Romero-Apsilos said: "The lawsuit is without merit." Bank of America spokesman Lawrence Grayson, Credit Suisse spokesman Steven Vames, JPMorgan spokeswoman Jennifer Zuccarelli and Lloyds spokeswoman Sarah Swailes declined to comment.

Representatives of the remaining banks declined to make an immediate comment or could not immediately be reached for a comment.

U.S., British and Japanese regulators are examining whether major banks understated Libor to reduce their borrowing costs and the potential for investor panic, a person familiar with the matter said last month.

(Bloomberg) -- Oil, Gold Seen Rallying as Global Economy Overcomes ‘Headwinds’

Oil, platinum and gold may rally as the global economy withstands the “headwinds” of higher interest rates, Europe’s sovereign-debt turmoil and Japan’s nuclear crisis, according to Threadneedle Asset Management Ltd.

Threadneedle is bullish on oil and platinum as demand climbs, while gold may advance to a record $1,800 an ounce, manager David Donora said in an e-mail interview. The London- based hedge fund targets its $149 million main commodity fund to beat the Dow Jones-UBS Commodity Index by 6 percent in 2011.

Citigroup Inc. said this week industrial metals have “limited upside” while silver may fall as central banks curb inflation. Goldman Sachs Group Inc. has ended a call to buy raw materials including oil in the near term, while forecasting gains over the next 12 months.

“We see short-term headwinds as the market digests higher prices, tightening in emerging-market countries takes effect, and the market adjusts to the tragedy in Japan,” Donora said.

“We believe the recovery will continue and that demand for commodities will accelerate into the end of the year.”
Group-of-20 finance chiefs said last week the world economy is strengthening, citing “increasingly robust” demand growth even as Japan rebuilds from last month’s record quake and nuclear disaster and Europe battles a debt crisis. China, the world’s largest metals user, grew at a faster-than-estimated 9.7 percent in the first quarter, according to government figures.

Investors have more than doubled their bets on higher prices for commodities traded in the U.S., according to government figures. The Dow Jones-UBS Commodity Index has gained 5.2 percent this year and touched the highest level since 2008 on April 8, led by gains in silver and cotton.

‘Consistently Bullish’

Threadneedle Asset Management, founded in 1994, oversees total assets of $97 billion. The main commodity fund, which is managed by Donora and invests in energy, metals and agricultural futures as well as equities of producers, posted a year-to-date return of 9.2 percent, data compiled by Bloomberg showed.

Donora added gold to his list of this year’s best bets as investors seek to preserve their wealth against rising inflation and weaker currencies. The dollar lost 5.3 percent against a basket of currencies this year.

“One would expect gold to be the safe-haven currency of choice,” Donora said on April 18. Immediate-delivery gold, which has gained every year since 2001 and touched a record $1,499.32 an ounce yesterday, traded at $1,495.35 at 9:36 a.m. in Singapore.

Threadneedle is also “consistently bullish” on oil and platinum as they face supply constraints and increased demand, Donora said, without giving forecasts. Crude in New York has soared 30 percent in the past year to $108.39 a barrel as unrest in the Middle East hurt supply, while platinum rose 3.7 percent to $1,779 an ounce.

Global Campaign

The global campaign to fight inflation won’t curb demand for commodities, Donora said. Central banks across the globe, including the European Central Bank, have raised interest rates to counter rising prices and China has taken other steps, such as selling oilseeds at a discount to market prices.

“Any efforts to subsidize commodity prices to soften inflation are likely to offset the rationing effect of higher prices,” he said. “This leads to higher prices ultimately.”

Corn more than doubled in the past year, wheat surged 66 percent and soybeans rose 37 percent. World Bank President Robert Zoellick said on April 16 that the global economy is “one shock away” from a crisis in food supplies.

Still, Donora did not expect a return of the food crisis that was seen in 2008 as he has “a lot of confidence in the North American farmer.” The U.S. is the world’s largest exporter of wheat, corn and soybeans.

(Bloomberg) -- Immediate-Delivery Gold Surges to More Than $1,500 Per Ounce

Gold for immediate delivery climbed to more than $1,500 an ounce for the first time, rising as much as 0.3 percent to a record $1,500.43.

(Bloomberg) -- Gold Futures in Shanghai Surge to a Record

Gold futures on the Shanghai Futures Exchange jumped to an all-time high of 314.19 yuan a gram, surpassing the previous peak of 314 yuan reached in November.

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SME MOFO's picture

Everytime it goes up and I'm not maxed out long in my futures account I feel like someone is stealing from me

but the only reason I set up the futures account was to hedge my physical position

Instead I've been texas hedging the whole way up, I think I may have a problem.

Is there some kind of rehab for this?

SME MOFO's picture

old timey swimsuit is the key!

bigelkhorn's picture

that is true I guess.

Damn you guys noticing some storms coming over your place. 


I just Had a look at the FFT guys. And they are predicting a big set of tornados to come.

They have been VERY SPOT ON in the past...and say : "Expect it to be very bad over the next couple of days in the US mid-west, south and maybe even up toward the Canadian borders.  At least one F-5 will come out of this, maybe more than one"

Stay safe people. MIght get rough.


ZeroPower's picture

Another day, another full $ up on silver. Lol.

goldfish1's picture

Wasn't it here that I read at $47 silver, JPMorgan is toast?

ZeroPower's picture

No, it was a big joke at $36/oz. Apparently due to "the way their derivatives contracts are tied into the price" --> LOL.

That comment was directly from Blythe herself. So, dont believe everything you read. Or their handle for that matter.

MonsterBox's picture

Man, its nice to FINALLY be on the right side of something.  But Tyler is right, we should "take pause" as both PMs have shot up pretty fast lately. 

Still, neither is accepted or pushed by the MSM so they really don't fit the "bubble" profile, yet.

HelluvaEngineer's picture

I think we've reached the point where big money is escaping the dollar, and trying to do so without spiking these prices.  There may not be a pullback for a long time.

Sudden Debt's picture

even a 4$ dip wouldn't catch my attention now.

Eyes to the horizon and straight on.




THE DORK OF CORK's picture

The Euro needs more money as the ability to produce sovergin money is limited by ECB decree - its as simple as that in many ways.

I am becoming more and more convinced that the rise in Gold is chiefly a Euro phenomena.

The Euro is a sovergin money / nation state  killer.

goldfish1's picture

Perhaps more informed reading on the subject is in order.

Jim Willie today:

50 Factors launching gold

THE DORK OF CORK's picture

Look all I am saying is that the high priests in the ECB know the central bank war model is dying so they have to reinvent themselves for the 21rst century if they want to remain in the debt game.

A altruistic monetory policey would simply involve a treasury producing goverment money and full deposit  banks rising or falling based on their investments - this would be inherently self regulating.

However Its never going to happen this side of the dark age

Although you would need a gold mechanism to settle foregin trade unless you want to go back to the war model.

Anyhow this Donald Duck cartoon accurately conveys how the old CB war model works , replace high explosives exported to foregin lands with mercantile products both fiat and real goods and you get the picture.


hugovanderbubble's picture

Please take a look to US - Munibonds 10yrs CDS and 5yrs CDS...

Long-John-Silver's picture

We will awaken one morning and be shocked by a dramatic rise in Gold. It's sitting on a compressing spring and the straps holding it down are about to be torn asunder.

cranky-old-geezer's picture

Dollar index dropping like a stone since monday midday, now 74.39.

74.18 is the magic number.

duo's picture

We need an AGQ 10:1 split!

Just Observing's picture

But Dave Ramsey keeps saying I'm an idiot owning gold and ought to get rid of it and put my currency in "good growth stock mutal funds"........what to do, what to do.....

writingsonthewall's picture

...on every journey there will be people pointing you in the wrong direction - the trick is to work out who is trustworthy and who isn't.


The real question is what will you tell Dave Ramsey when it turns out he is 100% incorrect?

akak's picture

Since 2001 Dave Ramsey has ALREADY been proven to be, oh, about 500% incorrect!

That guy is probably an unwitting shill for the banksters, but a shill he is nonetheless.

cranky-old-geezer's picture

DR preaches to the sheeple masses who don't have a clue what's really happening.

Yes stocks have had a nice runup since March '09 thanks to Bernokio's massive money injections.  And it may keep going.  But the dollar is collapsing now.

HelluvaEngineer's picture

Preferably one with high loads.  You know, Scottrade will let you buy many of these with no commisions!

PS - you forgot that short haired bimbo that tells Oprah viewers to keep their money in the bank.

writingsonthewall's picture

Everybody loves Gold!

I had an argument with someone recently who was adamant that 'Gold has little value in the real world' - which I have to admit was rather ironic - someone describing a FIAT money based system as 'the real world'.

This is no bubble - this is the end of a FIAT currency, the only questions remain are 'how long' and 'how fast' - decline is inevitable.


Anonymouse's picture

What burns my butt in all of this is that the Bernank is screwing me over from all sides.  I get no interest on savings because of this ass, and now he is making sure that I lose my shirt when I move my USD overseas.  He must be lying awake at night worrying that someone outside his circle is NOT getting screwed.  Bastard

If it weren't for my gold and silver, I'd be totally done over.

Sudden Debt's picture

I guess he was talking about his gold wedding ring.

Most weight about 2 to 3 gramms.



ak_khanna's picture

The way Banksters are currently minting money.

They are driving the USD index down and pumping up everything else. This process will continue till there are no long positions left in the USD index and no short positions in any of the commoditie­­­s, stock or currencies other than the USD.

The operators are then likely to take the long position on the dollar and short position on everything else. They would then use their money power to move the markets in the direction which would get them the maximum profit while screwing all other traders / hedge funds / investors.

The stock, commodity and currency exchanges have been reduced to gambling dens whereby the more powerful traders with deep pockets move the markets to maximize their own profits at the expense of the remaining not so powerful players. The big boys have enormous money power to move the markets in the direction which results in maximum profits for themselves­­­. They effectivel­­­y use the media to lure the other players in the market to a position where they would incur maximum loss.

The markets will turn downwards only when the banksters have eliminated all the short positions and only they themselves have positioned themselves to profit when the market falls


When an unexpected world event catches the banksters with their pants down and the softwares they use to rig the markets go berserk beyond their control.

HelluvaEngineer's picture

Please quit posting the same damn spam 10 times a day.

Steroid's picture

How much would the inflation adjusted high be with John Williams' numbers?

GoldFinch42's picture

Based on inflation through March 2010, the 1980 gold price peak would be $2,377 per troy ounce, based on not-seasonally-adjusted-CPI-U-adjusted dollars, and would be $7,559 per troy ounce in terms of SGS-Alternate-CPI-adjusted dollar.

We still have a long way to go in this bull market.

mogul rider's picture




RobotTrader's picture

Funny how as PM prices go up, Chinese Internet stocks go up even faster!

I think the entire growth stock and PM sector is getting too crazy, eventually there is going to be a rotation back into big cap, slower growth names.

I mean really, how much longer can this last??


HelluvaEngineer's picture

That's amazing.  Pretty soon that chart is going to start moving to the left!

cranky-old-geezer's picture

Yes RT stocks are doing well, no argument on that.  I too wish I had bought apple in '03.  But that's hindsight.  I have no faith in equities at this point. 

And faith is all there is now (since fundamentals are gone). Faith that Bernokio will continue single-handedly supporting equities, which he is likely to do.  I see no reason he would stop.

But I'm not a faith guy.  I like fundamentals.  PMs have the fundamentals now.

Sudden Debt's picture

Yes... you're right... it sucks being you...


Robo, you should know that gold and silver will keep rising untill banks can return at least a 10% div.

That's what pulled down gold in the 80's.

And if you look at the div's of CITI and BAC, that's not yet happening.

And now that those German and Irish banks will have a liquidity problem in the next 2 years, that's like a guarantee that gold and silver will keep going up for the next 2 years.




Hephasteus's picture

Still not as funny as posting a chart of gold getting hammered down with a bold proclamation to sell just last night and waking up with that chart just squatting on 1500+.


RobotTrader's picture

WYNN is up $7 pre-market.

Heh, I wonder when the last time NEM or GG were up $7 pre-market???

GOSPLAN HERO's picture

Great news ... the USD still buys many Zimbabwe dollars:

1.00 USD = 361.900 ZWD

When will the USD reach parity with ZWD?

jimijon's picture

I bought two 100 Trillion Zimbabwe Dollars for $4.00 on ebay about six months ago.

Today they are going for $5.00 a piece. Not a bad return!

Silver Shield's picture

The CPI adjusted high for silver is $132.07 but the REAL silver high accounting for the increase in the money supply is @ $500.

HEHEHE's picture

This price movement lately seems to be more the fear of the unknown than anything else.  1) If there's QE3 and no real movement on the US debt reduction front then PM's go to the moon. 2) If there's QE3 but no meaningful movement on the US fiscal front you'll probably see a minor correction say 10-15%.  3) If there's no QE3 and meaningful movement on the US fiscal front there will be a major correction 30-40%.  Scenario 2 seems most likely given the way DC works.  The corrections would be post run-up of course which will likely continue, though not at this pace, through the end of QE2.  I have a feeling this summer is going to become a violent sh*t storm in many places in the world.

gall batter's picture

HEHEHE, there's a violent shit storm in many places now.  Not much news about Japan but the people there are suffering.  The Gulf of Mexico is laden with petroleum and Corexit.  And the wars, wars, wars.  

HEHEHE's picture

Not arguing with anything you are saying as we a a select few informed people out there- and I don't say that to sound elitist; I am saying this summer you are going to start seeing the "Dancing With Stars" watchers and I-porn droolers start waking up and getting pissed off in a lot of places that people didn't expect.

I still get a chuckle when a friend of mine last summer said how amazed he was they got that oil cleaned up so fast, when I told him it was because they dumped thousands of gallons of a toxic dispersant to make it dissolve into the water table he looked at me like I had three heads.  Not only do people not want to hear the truth most of them don't want to believe they are as gullible as they've been listening to the MSM and the gubmint.