Gold rushes higher
Gold futures advanced more than $60 per ounce from Monday’s opening with Central Bank buying and with the signs that the U.S. Federal Reserve might be more accommodating regarding interest rate policies. The central governments of Europe and China have become active buyers as they are the world’s largest gold owners, along with the U.S. Some economists believe Central banks can continue to borrow or “print” unlimited money and purchase gold as a safe haven against inflation, banking crises or geopolitical threats. Silver, platinum and copper also rose but far less than the yellow metal.
U.S. gold standard came and went
A gold standard is a monetary system where a country’s currency is linked to a fixed amount of gold. The country could set the price of gold, determine the value of currency and allow people to convert dollars into gold. In the U.S., The Gold Standard Act of 1900 set gold as the sole standard for currency.
By World War I, the system began to break down, and with the Great Depression, people began to hoard gold. In 1934, President Roosevelt’s Gold Reserve Act made private ownership of gold illegal. By WWII, the U.S. dollar became the de facto world currency, and by 1971, with inflation, an imbalance of the gold supply and price fluctuations, the gold standard ended during Richard Nixon’s presidency.
Today, gold prices have made the metal a major investment tool. Gold is also used in jewelry and in modern science including electronics, with India’s and China’s populations dominating the hoarding.
Whether weather will grow differently
A La Niña is a cooling of temperatures in the Pacific Ocean. National Oceanic and Atmospheric Administration Climate Prediction Center, a national weather service, has issued a La Niña advisory lasting anywhere from February through April.
In the U.S., the effects of La Niña include below average rain in the Southern Plains and parts of the Midwest that could cause some crop stress. Lower yields of corn, soybeans and wheat can occur with the pattern, leading to price instability.
Across the world, the La Niña effects can include flooding in Northern Australia, increased monsoons in Southeast Asia and a rainier than usual Northern Brazil. For India the agricultural prospects increase with expected heavier rainfall. All of these worldwide conditions will vary with the intensity and duration of the effect, causing the agricultural community to keep a cautious eye on the climate pattern.
Words of wisdom
The “Golden Rule” of capitalists: He who has the gold makes the rules.
CME midday prices: Price per bushel: March soybeans, $10.36; March corn, $4.86; March wheat, $5.40. February livestock per 100 pounds: Cattle, $197.50; hogs, $81.60. Metals per troy ounce: February gold, $2,750; March silver, $31.14. March copper per pound: $4.36. February crude oil per barrel: $78.30. February natural gas $3.97 per 10,000 MMBTU.
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