This week, for only the second time in gold price history, gold surpassed the $900 per ounce mark. This is a response to the worsening global financial crisis that is driving investors to seek safety in the wealth-preserving metal.
The $900 per oz. gold price is somewhat misleading, because if we adjust for inflation then the january 21 1980 gold price of $850 per oz. (formerly the all time high) is still much higher, and there is still much more room for the gold price to increase. But the $900 per ounce mark is yet another sign that financial turmoil will continue to drive historical gold prices upward.
The new high is probably also an indication of decreasing supply, as 2008 saw South African gold production drop by 14%, pushing it into third place gold producing country behind China and the USA.
The continued threat to the US dollar will also likely continue to push gold past $1000 per ounce early in 2009.
According to some, the current price doesn`t accurately reflect the high demand for gold because of hedge funds selling off large amounts of gold to cover losses elsewhere. Once this stabilizes, a gold price of over $1000 per oz. is very likely.
The golden arrow is still pointing upward!