[Dan.Linehan]

Originally Posted by JFKDemocrat

Have you ever thought that the high gas prices are due to a weakening dollar? $1000 an ounce gold should be an indicator to you that the current gas prices are accurate. If the oil companies were inflating their prices and lying to us that it is a supply/demand issue, then gold prices wouldn't have skyrocketed like they have. Right?

What makes you think the Gold market isn't cornered by the same private investment groups?

In theory, sharply falling demand, a rapidly growing gold-recycling sector, and steady mine supplies of gold should stabilize the metal's price. Indeed, Virtual Metals is predicting a 422-tonne surplus in the world's gold market this year, after two successive years in which demand outweighed supply. And yet gold is trading as if demand is rising rapidly and production is falling. The contract for delivery of gold in October is trading at $614.4 an ounce—even more than the current market price.

What gives? Essentially: speculation. While consumers are reacting to expensive gold by demanding less of it and recycling more, investors are reacting by bidding up the price further. And just as has been the case with every asset class over the past decade—real estate, Brazilian stocks—strong performance attracts a tidal wave of hot money. Indeed, Virtual Metals concludes that the price of gold is "being supported by the sheer wall of investment money moving into commodities.

Why gold prices are so high. - By Daniel Gross - Slate Magazine