Gold shines as inflation fears rise
Gold headed up to a new record of over $990 this week. And, as long as Fed chairman Ben Bernanke continues to cut rates at the expense of rising inflation, this long-term bull run looks set to continue.
After pausing for breath late last month, gold has taken off again over the past few days, approaching $990 an ounce early this week before dropping back to around $960 as traders took profits; it then headed up to a new record over $990. And the long-term bull run looks far from over.
Last week's tumble in the greenback was prompted by Fed chairman Ben Bernanke's evident intention to cut rates further despite high inflation. His desperate dash for growth at the expense of higher prices means "investors are being handed engraved invitations to protect their wealth by getting into the prime inflation hedges: precious metals", says Chris Weber on Kitco.com.
Higher oil prices are also fuelling inflation fears, while ongoing credit jitters and the prospect of a nasty recession in the US are bolstering gold's appeal as the ultimate safe haven and store of value. Higher inflation expectations amid commodities' strong recent run and continued dollar weakness should continue to underpin investment demand for gold, said Standard Bank.
MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
With investment demand showing no sign of abating, the possible sale of 400 tonnes of IMF gold should be easily absorbed over time, as Fxstreet.com points out. Speculators have continued to buy gold despite rising prices, said Martin Hutchinson on Breakingviews.com, and as long as real global interest rates are low, this is likely to continue. Given that there is far more money available to invest now than in 1980, gold may well exceed the 1980 peak of $2,250 in today's dollars.
Get the latest financial news, insights and expert analysis from our award-winning MoneyWeek team, to help you understand what really matters when it comes to your finances.
MoneyWeek is written by a team of experienced and award-winning journalists, plus expert columnists. As well as daily digital news and features, MoneyWeek also publishes a weekly magazine, covering investing and personal finance. From share tips, pensions, gold to practical investment tips - we provide a round-up to help you make money and keep it.
-
How inheritance tax trick is helping families save ‘six-figure sums’
Happy to skip a generation to save thousands on inheritance tax? A deed of variation could be the estate planning tool you need.
-
Nationwide: House prices unexpectedly dropped in August
House prices fell by 0.1% in August in a surprise drop, according to Nationwide, as “affordability remains stretched”
-
Can Donald Trump fire Jay Powell – and what do his threats mean for investors?
Donald Trump has been vocal in his criticism of Jerome "Jay" Powell, chairman of the Federal Reserve. What do his threats to fire him mean for markets and investors?
-
Freetrade’s new easy-access funds aim to beat top savings rates
Freetrade has launched an easy-access exchange traded fund (ETF) range - here’s how the ETFs work and how they compare to the savings market
-
Go for value stocks to insure your portfolio against shocks, says James Montier
Interview James Montier, at investment management group GMO, discusses value stocks and slow-burn Minsky moments with MoneyWeek.
-
Where do we go from here?
Features A new series of interviews from MoneyWeek
-
As China reopens, why pick an income strategy?
Advertisement Feature Yoojeong Oh, Investment Manager, abrdn Asian Income Fund Limited
-
Income in the USA
Advertisement Feature Fran Radano, manager on The North American Income Trust
-
The challenge of turbulent markets
Advertisement Feature Today, ISA investors face one of the most challenging economic environments seen in recent years. However, good companies can still thrive, even in the toughest economic conditions. That’s why BlackRock’s fund managers focus on these businesses when they’re looking for investment opportunities.
-
What the return of the bond vigilantes means for investors
Analysis The US Federal Reserve is dancing to the tune of the bond vigilantes, says Max King. Here’s what that means for stockmarket investors, the economy, and you.