Trouble with Soaring Gold Prices

>> Gold traders are having a wild ride this month. The glittery metal hit an all time high of $1,072 an oz. last week before settling at 1055. The gold rally began nearly a year ago; the price up 47% in 11 months, exciting for gold enthusiast and consumers who are getting record cash for their gold jewelry.

>> What kind of deals are they getting these days?

>> They're getting more money for their item than if they had it in the house or if they bought it 5,8,10 years ago.

>> But when it comes to the nation's economy gold's price rise can also be a distress signal.

>> Gold tends to do well during periods of duress.

>> Even as the Dow Jones Industrial average rallied past the 10,000 mark, normally a sign of an improving economy some investors were not so optimistic and hedge their bets putting cash into gold.

>> Is there some uncertainty in the world? Yes and in the past people have turned to gold as a hedge versus uncertainty.

>> Gold rushes are often predictors of inflation but the latest consumer price index shows no immediate signs. Still many analysts worry that inflation is inevitable because of the sheer scope of government spending, guarantees and bailouts.

>> By printing all that money you devalue the currency. In devaluing the currency, down the road there's going to be inflation.

>> In fact the US dollar has dropped 16% since March as gold prices rose. Still the dollar is in better shape now than it was last year.

>> The dollar's not falling out of bed. It's not causing distortions in other markets at this point.

>> Still investors are jittery and as long as they are they'll keep going for the gold. Randall Pinkston, CBS News, New York.

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