Gold hits a new record high

published 14 May 2010

Gold is "on fire", said www.iafrica.com. It hit a new record above $1,240 an ounce this week, eclipsing the previous record of $1,226 notched up last December. It has gained 12% in 2010 and almost quintupled since its bull run began in 2001. Gold has also hit a new record in pounds and euros: above £830 and e980.

What the commentators said

Gold has "consistently shown" that it can decouple from the traditional inverse relationship with the dollar, said Bill O'Neill of Logic Advisors. "It is front and centre, assuming its role as the currency of choice." No wonder. The eurozone's bail-out package hasn't convinced anyone that the debt crisis is over.

Indeed, as Frank McGhee of Integrated Brokerage Services pointed out, it will just create more debt. There is the real threat too that other major economies, such as Britain and America, will end up debasing their currencies by inflating their huge debt piles away. So gold's role as the only currency that can't be printed at will (thus making it a store of value) is being rediscovered. "Sooner or later, everybody stops trusting paper."

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Throw in tight supplies, a steady rise in Chinese gold consumption and central banks buying to diversify their reserves, and gold's bull run is set to endure.