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The price we pay for a golden season

Stephen Beard Sep 8, 2009
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The price we pay for a golden season

Stephen Beard Sep 8, 2009
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TEXT OF INTERVIEW

Steve Chiotakis: For the first time in six months, the price of gold has surged above $1,000 an ounce. Good news if you own some of the yellow metal, but not, perhaps, for the global economy. Gold is the ultimate safe haven in times of trouble.

Let’s check in with Stephen Beard, joining us live from London. Hi, Stephen.

Stephen Beard: Hello, Steve.

Chiotakis: So what’s behind the latest spurt in the price of gold?

Beard: Well, the timing of this in a way is not a surprise, because this traditionally is a very strong time of year for physical demand for gold — for jewelry. We’ve got Hindu festivals in India, the wedding season there. Chinese buyers are usually busy now as well preparing for the new year. But there’s a lot of investor interest in gold as well, and that could be ominous.

Chiotakis: All right, so why ominous?

Beard: Well, because it could reflect fear. First of all, fear of inflation. We’ve got a lot of cash sloshing ’round the global system at the moment with record low interest rates, central banks printing money like crazy. Some investors are saying deflation’s not a problem anymore — inflation, perhaps hyper-inflation, is going to be the major challenge, so let’s get into the oldest store of wealth, gold. Other investors are even more pessimistic, they seem to be saying the global economy is very fragile, we’ve got currencies like the dollar that are being debased, we could be facing turmoil. Gold could be one of the few assets to trust.

Chiotakis: Stephen, the price of gold has been pretty volatile. I mean, do traders and analysts really expect it to keep on rising?

Beard: No. I mean, some are pointing to the fact that it was $1,000 an ounce back in February, and by April it was back well below $900. So some analysts here are expecting the price to do the same thing this time, to come back down with a bump.

Chiotakis: All right. Stephen Beard, joining us live from London. Stephen, thank you.

Beard: OK, Steve.

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