Gold Prices Approaching $1,000 Per Ounce

The price of gold is becoming, well, "golden." CNNMoney.com reports that the price of an ounce of gold climbed $13.10 on Monday to close at $973.70 on the New York Mercantile Exchange; it's a four-month high as well as moving into striking distance of $1,000.

Writing in a note Monday, John Nadler, analyst with Kitco Bullion Dealers Montreal said "Gold's safe-haven attributes were in obvious demand," the CNNMoney.com says.

What are the reasons for the attractiveness of gold that have raised the price 11 percent or $100?

The general reasons given in the CNNMoney.com article are the weakening U.S. dollar and worry over the economy. However, the true "flashpoint" may be the concern over federal involvement in struggling financial institutions, the beginning trend we have been following at the Associated Content News Team.

I, and other writers, reported on the 12th of this month about the FDIC taking over a failed mortgage lender. In my article, "FDIC Seizes IndyMac Bancorp Inc.," I reported that the second largest mortgage lender had been taken over; this is the trend that appears to be the true cause driving up gold -- federal commitment to banks.

CNNMoney.com indicates investors simply are too nervous about the possible federal involvement with such giants as Fannie Mae and Freddie Mae, which could have a major impact on an already weak economy. The shaky real estate market doesn't help.

While the current price of gold is tremendous, it is nowhere near the high set in 1980 (when adjusted for inflation). That price would be considered to be $2,200 in this economy. You may recall that the economy was weak at that point as well but there also were world tensions.

While gold has been the focal point of precious metals, other precious metals have had their prices driven up, CNNMoney.com reports.

September silver added 43 cents to close at $19.25 an ounce on the Nymex and September copper gained 1.2 cents to close at $3.752 per pound.

Considering the state of the real estate market, as well as the continued impact of oil prices on the economy and employment, one would have to believe that gold prices will only continue to rise.

References:

http://money.cnn.com/news/newsfeeds/articles/apwire/af459d0d61e950d19a43c2521a343287.htm