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Dollar’s Weakness Inspires Modern-day Gold Rush

As part of his series Making Sense of the financial crisis, Paul Solman looks at how the dollar's weakness has spurred a new gold rush.

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  • MAN:

    I love gold, so I like to surround myself with gold.

  • PAUL SOLMAN:

    The latest California gold rush: the Hard Assets Investment Conference in San Francisco. The glittering metal had hit $1,100 an ounce and was bringing its enthusiasts out of them thar hills.

  • MAN:

    This is 44-karat gold plate here. Isn't that pretty cool? That's pretty awesome, right? This is a quarter-ounce gold American Eagle bullion coin, which is 24 karat. This one here is a half-ounce gold American Eagle proof coin. It was actually made by the U.S. Mint.

  • MAN:

    Hi. Can you tell me something about you company?

  • PAUL SOLMAN:

    Folks like Jim Luthi think hard assets like gold are all that glitters in a world of proliferating paper money.

  • MAN:

    Governments around the world are printing money, and especially in the U.S.

  • PAUL SOLMAN:

    Printing money for stimulus packages and bank bailouts worldwide, that is, and especially printing dollars, raising the specter of inflation in America…

  • MAN:

    This particular sample has — has 15 ounces of gold.

  • PAUL SOLMAN:

    … and a higher gold price, as investors buy the metal to protect themselves.

    Toronto's Ian McAvity has long been attracted to the hard stuff. Some may recognize him from PBS' "Wall Street Week" back in the early '80s, when gold was last making headlines.

    IAN MCAVITY, EDITOR, Deliberations on World Markets: I'm a Canadian, and I'm watching the United States from the outside. I have U.S. dollars — not many — and I'm an analyst of international capital and international flows. Everything that this country is doing is basically telling me that you're going to depreciate the value of those U.S. dollars over time.

  • PAUL SOLMAN:

    The fear is that creating more dollars will drive their value down and down. A slow economy, however, has meant less spending, less borrowing, and thus fewer dollars circulating, ever since September of 2008, when we first visited Charlie Mammoser's Northern California Coin Exchange.

  • CHARLIE MAMMOSER:

    Right now, we're in a down trend. Gold is $750.10.

  • PAUL SOLMAN:

    So, gold reflected the fear of deflation, prices going down, the dollar going up, just 14 months ago. But it's not true any more.

  • CHARLIE MAMMOSER:

    Yes, it's been a heck of a year. It's been a wild ride.

  • PAUL SOLMAN:

    The man who brought us here, devout gold bug John Williams. The past year has validated what he's long believed.

  • JOHN WILLIAMS, ShadowStats.com:

    Gold was a good buy at $200, a good buy at $500, a good buy at $750. We're over $1,100. That's still a good buy. It's going to be a good buy at $5,000.

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