Gold update 25 Feb

Gold hit a record high last week of US$953.75 an ounce. It has now consolidated around the US$947-948 mark.

As this report says, the continuing weakness of the US dollar and recession fears in the world’s biggest economy are driving worldwide interest in gold.

We’ve seen increased demand here at New Zealand Mint as people look for a safe investment option.

However, perhaps all the renewed interest in gold is because of those little famous gold statues that will be given out at the Oscars this evening. As this story says, they’re more valuable than ever…

Gold update 13 February

Currently gold is trading at US$905 an ounce after dropping from over $920 yesterday.

Last Saturday the Group of Seven (G7) nations approved the sale of gold stocks held by the International Monetary Fund (IMF) to raise money for the financial organisation. More info here.

This is significant in that the IMF holds a whopping 103.4 million ounces of gold worth about $92 billion at current market value. Selling a portion of that stock would surely push prices down around the world as the supply of gold increased.

However, any sales of IMF gold must be approved by 85 percent of the votes held by its members and the US has 17 percent of the total votes, which gives it veto over the organisation’s decisions.

Given that the US Congress has to approve IMF gold sales, and that they are in the midst of an election campaign, and that the US economy is looking shaky - it is unlikely that the IMF will be selling its gold anytime soon. Still it is interesting to see an organisation like the IMF contemplate capitalising on the high gold price.

In other news pointing to the ongoing strength of gold, Japan’s top bullion house Tanaka Kikinzoku Kogyo K.K. announced it bought a record amount of gold last year.

You will recall me saying that gold is a good hedge against inflation. You might be interested in this article that shows gold performing better than housing as an asset that holds its value in times of prising prices.

Finally – six-year-old strikes kilo of gold.

Year of the Rat

Yesterday was the first day of the Chinese New Year and to celebrate the New Zealand Mint produced a number of limited edition one ounce legal tender silver commemorative coins.
The coins feature an engraved representation of the first animal of the Chinese zodiac in relief colour on a blue background bearing the inscription “Year of the Rat 2008”.

There was a story on the coins in the NZ Herald today - you can read it here.

And you can pick up the coins here.

Happy Year of the Rat!

Gold update 4 Feburuay 2008

It has been a while since my last post. And you'll see from the graphs above that the price of gold has increased out of site during that time.

With the increase in value, we here at the NZ Mint have seen a dramatic increase in interest from everyday investors. I can tell you work has been really busy the past few weeks (hence my lack of posts...).

In the past three weeks gold has risen from about US$860 an ounce to US$911 today. Looking back to Christmas last year, we've seen the gold price jump over a US$100 during that time.

The most important reason for this has been the weakness of the American economy. Many pundits are picking the USA to slump into recession this year. And in such times gold becomes attractive as a safe haven investment.

In the past two weeks the US Federal Reserve has cut interest rates by 1.25% in order to try to starve off that recession. The cuts meant more money is available to chase gold and as a result investors have turned to the precious metal for safety.

In this country there has been a lot of media interest in gold's rise: I appeared on TV3's Sunrise programme to talk about factors affecting the price of gold and the New Zealand Mint featured in the NZ Herald to talk about the gold price.

I'll continue to keep an eye on the price of gold and keep you up to date right here.

In other news, when you buy gold - this is what you're buying - gold atoms magnified a zillion times under a microscope. Pretty huh?