GOLD PRICE NEWS – The gold price touched a new all-time high of $1,894 per ounce early Monday before backing off to $1,865. The price of gold rallied alongside the broader stock and commodity markets as expectations of a fresh round of quantitative easing made the rounds on trading desks across Wall Street. WTI crude oil gained 1% to $83.10 per barrel, boosted by weakness in the U.S. dollar. Silver futures rallied 1.4% to $43.00 per ounce.
The spot price of gold has posted a series of fresh all-time highs as it advanced for the seventh consecutive week. Gold prices have gained 30.8% thus far in 2011. Silver has climbed alongside the gold price, surging 9.7% last week to $42.91 per ounce. Gold’s sister precious metal has appreciated 38.7% this year although still trades 14% lower than its 30-year high of $49.82 reached on April 25th of this year.
The rally in the price of gold and silver lifted precious metals equities, which were able to shrug off the weakness in the broader equity markets. The Philadelphia Gold & Silver Index (XAU) posted a weekly gain of 1.9%. Barrick Gold (ABX), the world’s largest gold producer, inched higher by 0.1% last week. Goldcorp (GG) and Newmont Mining (NEM), two other large-cap gold stocks, advanced 3.5% and 4.6%, respectively. Gold mining stocks moved higher across the board Monday morning on strength in the gold price.
The gold price was one of the few asset classes to advance last week as investors shunned equities and cyclical commodities amid growing fears that the U.S. and euro zone economies may be headed for recessions. Several key economic reports in both the U.S. and Europe came in far below economists’ estimates, which also fueled calls for the Federal Reserve and European Central Bank (ECB) to step up their level of accommodative monetary policies.
Marc Faber – author of The Gloom Boom & Doom Report and one of the more prominent gold bulls in recent years – provided his latest outlook on the global economy, financial markets, and the gold price last week. “Financial conditions are today worse than they were prior to the crisis in 2008,” he asserted in a telephone interview from Thailand. “The fiscal deficits have exploded and the political system [in both the U.S. and Europe] has become completely dysfunctional.”
As for the Federal Reserve, Faber once again spared no criticism of the U.S. central bank. “The Federal Reserve is a very evil institution in the sense that they punish decent people who have saved all their lives…These are people who don’t understand about stocks and investments, and suddenly they are forced to speculate.”
Given his disdain for fiat currencies, Faber criticized the U.S. dollar. “The function of paper money is to facilitate the exchange of goods and services, to be a store of value and a unit of account. The U.S. dollar fails on all three,” he argued. “Intelligent people, instead of holding cash in U.S. dollars with zero interest rates, why not hold money in gold and silver?”
With regard to gold and silver prices, in the most recent edition of his publication Faber wrote that “I am not sure how high the price of gold or silver will increase but when I consider the further inevitable growth of the US and other governments’ debts, the creation of paper money in the world and especially at the low gold ownership rate in the world, I am confident that the price trend of gold is up.”
Bill Fleckenstein – another well-respected investor who has been bullish on the gold price for many years – echoed Faber’s comments on Friday. Writing on Minyanville.com, Fleckenstein said that the combination of deteriorating economic conditions in the U.S. and Europe “have to weigh heavily on Ben Bernanke’s mind…the pressure to fire up the printing presses must be intense, for both Bernanke and Trichet.”
Flecksenstein went on to say that “If the current rout in the world’s bank stocks and stock markets continue, and I don’t see any reason why it won’t, I would expect a round of massive, coordinated QE on the part of the world’s central banks sometime soon – as in perhaps by Tuesday morning.”