MW :Yesterday's Top Story: Gold is not at a record high everywhere - just ask the producers
Gold's headline grabbing performance, with a succession of new record high fixes, comes at a time when the US dollar is under pressure and of course a good part of the investment and speculative activity that has driven prices higher has been predicated on concerns over the future of the greenback. Such speculation comes not just from the prospects for the efficacy of the US' Exit Strategy and bloated national balance sheets in general, but is exacerbated by the associated debate over the dollar's role in the international reserve system, not to mention rumours of changes in oil pricing techniques. The dollar's heavyweight position in the international system becomes almost self-fulfilling and it is hardly likely to cede superiority to any other currency in the foreseeable future. Economic and market dynamics, however, do suggest that a further deterioration in the dollar's international value is on the horizon and this is a primary driver behind gold price rises.
Amid all the fanfare that has surrounded gold's new record prices it is worth looking at what it has done in other currencies - and it is not, quite, at a universal record as the Australian and South African producers will be only too prepared to testify. As the accompanying chart shows, the price in South African rand, which in mid-October is just over R252,000/kg, is 23% off its high, which was registered in March 2009. The Australian price is down 20% from its February 2009 high, although in Canadian dollars, which obviously have a reasonably close relationship with their US brethren, the decline has been just 6%.
The average South African price for the second half-year to date is 11% down on the average for the first half of this year, although 7% higher than the average for the whole of 2008. In Australian dollars the half-year to date has averaged 10% less than the first half of this year, but is 15% up on the whole of last year. The Canadian average since the start of July is down by just 3½% on the first half of this year and up by 17% on the 2008 average.
