Gold Hits Record High on New Recession Fears
Gold prices soared and closed at a record high Thursday as the stock market plummeted on concerns that European banking woes could spread to the United States.
Gold jumped $29.10 (2%) to $1,822.90 per ounce in late morning action, as panicked investors dumped risky assets like stocks and rushed into traditional safe havens, including gold and U.S. Treasuries.
“Investors are running scared into gold because of the persistent problems and recession-like performances in Europe and United States,” Jeffery Nichols, managing director at American Precious Metals Advisors, explained.
Gold prices have more than doubled since the recession began in the winter of 2007, and so far in August the precious metal has risen by more than 11 percent, putting it on track for its biggest monthly gain since November 2009.
Because the value of Gold – unlike that of a currency – doesn’t depend on a single country’s economic health, the metal has become equally popular with investors craving big returns and those seeking safety from turbulent financial markets.
“Physical gold is the ultimate collateral because it has no credit risk,” BofA Merrill Lynch commodities analyst Francisco Blanch wrote in a note to clients.
Even though gold has recently hit a series of record highs, adjusting the numbers to take into account inflation puts it below a 1980 peak of $850, which in today’s economy would equal roughly $2,400.
via IBT
Img: Kerem Uzel/Bloomberg
