Investors Look to Gold: Price Highest Since ’83
Gold prices surged forward in the wake of Monday’s stock market plunge, surpassing $480 an ounce, their highest levels since the winter of 1983.
Meanwhile, gold stocks were among the only shares that bucked the huge selloff on the New York Stock Exchange. Only 15 of the approximately 1,600 stocks traded on the NYSE rose in Monday’s wild selling spree.
Shares of such gold producers as Newmont Mining, Northgate Exploration and Sunshine Mining were among those that gained in trading--a day when the Dow Jones industrial average fell more than 500 points. Newmont Mining, in the the midst of takeover battle with investor T. Boone Pickens Jr., rose 10% in value to close at $39.50 a share.
Silver prices also benefited from the gold rush. The bid silver price was $8.30 a ounce in London, up 47 cents from Friday, and $8.192 on the New York Commodity Exchange, up from $7.876 Friday.
The flight into precious metals, gold in particular, usually occurs in times of instability in world financial markets. Monday’s nervousness was heightened further by continued turmoil in the oil-sensitive Persian Gulf that was exacerbated by a U.S. attack on two Iranian oil platforms.
Oil prices initially rose Monday on news of the attack, but fell later in the mass move to safe-haven investments. The November delivery price for key West Texas Intermediate crude closed at $19.80, off 42 cents.
On another front, retail coin dealers reported a surge in the sale of one-ounce government coins known as the American Eagle and Canadian Maple Leaf.
Hallock Coin & Jewelry in Anaheim, crowded with customers Monday, sold “several dozen” of these gold coins, about five times the normal amount, said Scott Hallock, whose family owns the store.
The one-ounce coins were selling for about $500 a piece. “People are very nervous,” Hallock noted. “They don’t like to see a market like this.”
But other gold professionals noted the move to buy gold was not as great as might be expected given the magnitude of the stock market’s drop.
“After everyone took a bath in the stock market, who’s got any money to buy metals?” asked John Etz, a metals dealer in Phoenix.
“The move into the gold market has been modest,” said Donald McAlvany, president of International Collectors Assn., a gold brokerage in Denver. “There is no stampede yet.”
Gold prices haven’t been this high since closing at $505.70 anounce on the New York Commodity Exchange on Feb. 18, 1983.
Republic National Bank in New York quoted a $486.50-per-ounce price late Monday afternoon, up $15.50 from Friday’s close. The price on the Comex closed at $481.70, up from $471.60 Friday. The closing bid price was $488.50 in Zurich and $484.50 in London.
