Tags: gold | etf

WSJ Blames Gold Prices on Trade Council

Sunday, 28 Nov 2010 12:39 PM

Gold prices are soaring these days, flying high above $1,300 per ounce compared with a fraction of that as recently as the 1990s.

Weaker currencies such as the dollar and euro, even weaker these days due to stimulus measures, often send investors rushing to gold.

But there's another reason why prices have risen so high, The Wall Street Journal reports.

It's an exchange-traded fund called SPDR, spearheaded in 2004 by the World Gold Council as a conduit for investors to pump money into the precious metal when prices were a third of what they are today.

The fund, better known by its ticker symbol GLD, has grown into a $56.7 billion giant, becoming the world's largest private owner of bullion and soaking up $30 million of the metal daily.

Supporters say it has given more people access to invest in gold.

Critics say the fund has pushed gold prices up, making them subject to a harder correction when the time comes.

"We tell our clients to watch out for it, because it's there, and it's a real risk," says Jeffrey Christian, founder of CPM Group, which advises major investors worldwide on gold.

Hedge Funds are buying more and more GLD share as well as other exchange-traded funds tied to gold, according to Reuters.

Some heavyweight investors, however, feel gold prices are due for a fall.

"I called gold the ultimate bubble which means it may go higher," says George Soros, according to Reuters. "But it's certainly not safe, and it's not going to last forever."

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Gold prices are soaring these days, flying high above $1,300 per ounce compared with a fraction of that as recently as the 1990s. Weaker currencies such as the dollar and euro, even weaker these days due to stimulus measures, often send investors rushing to gold. But...
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2010-39-28
Sunday, 28 Nov 2010 12:39 PM
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