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Gold prices spike
A man pours molten gold to make a 6.5 kg bar of gold at his melting laboratory in Los Angeles, Calif.
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STEVE CHIOTAKIS: Well the saying goes all that glitters is gold. And after the big ups and downs of the stock market lately, apparently that glitter is a safe place for people to put their money. Here's the theory -- gold is in limited supply and will hold its value even if the global economy were to melt down. Today, an ounce of the stuff will cost you more than $1,750.
With us from London, which just happens to be the center of the gold trading market, is Marketplace's Stephen Beard. Hello, Stephen.
STEPHEN BEARD: Hello, Steve.
CHIOTAKIS: So, what exactly caused this latest spike in gold prices?
BEARD: Well in part, it was yesterdays unprecedented pledge by the Fed to keep interest rates close to zero for at least two years. The Fed said that to convince everyone that money would stay cheap in the U.S. -- it wouldn't slide back into recession. That's boosted stock markets, but it hasn't raised confidence in the dollar. After all, if you have U.S. inflation at almost 3 percent, but the U.S. interest rates are well below that, holding dollars doesn't make a lot of sense. Investors are buying gold because they distrust paper currencies. They believe the dollar is being devalued -- the Euro, the other big reserve currency may not survive because of the Eurozone debt problem. So buying gold, they're buying it as the oldest and the ultimate safe haven.
CHIOTAKIS: I'm curious, Stephen, if people are buying all this gold, where are they putting it?
BEARD: In special vaults -- and the cost of putting it there is soaring. That's because as the price of gold has jumped, so has the cost of insuring it. The Financial Times this morning says the cost is rising because London's running out of storage space. But that's not true, according to Paul Tustain, he's the boss of a company called Bullion Vault which trades in gold. And he said given the huge value provided by the weight of gold, it would be difficult to run out of storage space.
PAUL TUSTAIN: Bullion vault is the biggest storer of privately held bullion in Europe. All our gold, which is well worth a billion dollars and would fit under the desk that I am currently sitting at.
BEARD: Of course, it's not under his desk, it's in a stainless steel enforced, highly guarded steel vault.
CHIOTAKIS: I'm sure it is. Marketplace's Stephen Beard in London. Stephen, thank you.
BEARD: OK, Steve.
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Somebody's stealing our vault!
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Who you gon' call?
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Gold Busters
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Can you make all the gold you want by irradiating platinum with neutrons? Is gold beginning to overtake platinum in price? Will platinum then be fair game for conversion to glittering gold? But who has nuclear reactors for this conversion? What private company? Electric utilities? Have utilities suddenly become interested in building the latest and safest reactors recently? Did they instantly see the future in gold manufacture as confidence in our flaky fiat financial francs from Switzerland flounder? Is that alchemy the foundation of their sudden interest in nucuelar reactors? Who knows? One thing for sure, "Gold production by mining continues to be less than half as expensive as transmutation of elements."!
What does gold mining company do? Converts human resources and energy into nuggets of bullion. With increasing unemployment and falling natural gas prices we got the makings of lower gold production prices. With rising market price of bullion and falling production price profit margin at gold mine is now expanding. As gold prices ascend with larks, profit margins accelerate faster than a Boeing 797 with the flapperons down and afterburners a-blazing.
Scusi for jumping out of your jacuzzi.
Got to get back to my diggings
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