Gold Saw Biggest Jump in History

Gold biggest jump in historyRemember this chart because you won’t see it very often, if again at all.

Today, gold price jumped the most in its history, rocketing up $84.50 to close at $864.10 an ounce. Last week this time, gold just touched a 11-month low of $742.

Gold has been under a lot of pressure lately. As the U.S. economy slows, the demands for commodities are down, so is the appeal of gold as a hedge. At the same time, the U.S. dollar gained a lot of ground against the Euro in recent months. All these events together pushed gold price lower and lower. But that course was reversed today, amid fear of systemic risk of U.S. banks as I mentioned earlier. Investors returned to safe heaven in precious metals such gold and silver, which also jumped $1.73 an ounce to $12.34. Of course, the surge in oil price today, after briefly breaking the $90 mark yesterday, also fueled the rally.

Can this trend continue? As long as the uncertainty in the stock market continue, investors are still nervous, it could.

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4 Responses to “Gold Saw Biggest Jump in History”

  1. Jake Stichler |  Sep 17, 2008 at 11:34 pm

    As long as the Fed continues this rampant inflation with their double-digit billions loans/bailouts, yeah, gold will keep going strong.

  2. Tim |  Sep 19, 2008 at 9:10 am

    then in dropped. gold is in a bubble. there is no underlying fundamental that justifies the high price. just like in the early 80s, gold with precipitously drop like two tons of cement, and hopefully Guido didn’t cement your feet in when it does. we are no longer on the gold standard, yet people have this antiquated notion that gold is a hedge against inflation. well since the last bubble and precipitous drop, gold remained flat and declined, so how good is that hedge? that’s right, terrible.

    moreover, gold is traded like stocks now, unless you actually buy gold buillion, which most people these days do not. since you don’t own the hard gold asset, it isn’t worth anything because you can’t trade it if the world goes belly up. the premise behind gold being inflationary precaution is because the antiquated notion that you can trade gold as currency. well, with investment shraes, you don’t have the physical commodity. so tell me how you own gold? that’s right, you don’t.

    even if you did physically own gold, it isn’t worth the buillion or share price, it is worth scrap price which is far less than market price. again, unless gold by weight is being valuated to exchange for goods and services, it isn’t worth the share trade price or even the true buillion price.

    people were very happy when gold was dramatically rising past $1k/oz, i’m sure those people were sad when it precipitously fell towards $700/oz. again, diversification and look at the fundamentals. you can ride the wave now, but gold will go back down to $300-$500 eventually and there won’t be any warning when it does in the current euphoria over gold. again mitigate your risk on gold as well.

  3. Jake Stichler |  Sep 19, 2008 at 6:34 pm

    Tim – while you make some good points, you were wrong from the very beginning. M3 justifies the high price. Remember, we’re talking about gold traded in USD here – there’s an unlimited supply of USD, which is why the fed keeps creating more. There is a limited supply of gold, however.

  4. Jake Stichler |  Sep 19, 2008 at 6:36 pm

    P.S. The people that buy gold for fear that the world will go “belly up” *do* buy real gold. I happen to do business with several of them.