Gold Soars Most Since 1999, Silver Surges on Demand for Haven
Arizona Coin Collector
After reading Voltronicus posting on Depression, I
check out gold prices on Kitco price. It jump nearly
$100.00 dollars today. Found the story below as well.
http://www.kitco.com/charts/popup/au24hr3day.html
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FROM:
http://www.bloomberg.com/apps/news?pid=20601081&sid=a1h7Bndb7Qcs
Gold Soars Most Since 1999, Silver Surges on Demand for Haven
By Pham-Duy Nguyen
Sept. 17 (Bloomberg) -- Gold surged the most in nine years as
investors sought the safety of precious metals on concern that
the credit crisis will deepen, leading more financial
institutions to fail. Silver soared the most since 1979.
Equities tumbled after the Federal Reserve took over the
biggest U.S. insurer. The cost of borrowing dollars for
three months jumped the most since 1999 as banks hoarded
cash. Central banks in the Phillipines and Venezuela said
they may buy gold. In March, the metal reached a record as
the government steered JPMorgan Chase & Co. to buy Bear
Stearns Cos.
``People are worried about money being safe in a bank,'' said
Ron Goodis, the futures trading director at Equidex Brokerage
Inc. in Closter, New Jersey. ``With paper assets in question,
gold represents the textbook storehouse of value.''
Gold futures for December delivery gained $70, or 9 percent,
to $850.50 an ounce on the Comex division of the New York
Mercantile Exchange. The dollar increase was a record for a
most-active contract, and the percentage gain was the biggest
since Sept. 28, 1999. The metal reached the all-time high
$1,033.90 on March 17.
Silver futures for December delivery rose $1.158, or 11
percent, to $11.675 an ounce, the biggest gain since
Dec. 31, 1979.
Gold is up 1.5 percent this year, while silver still is
down 22 percent.
Gold for immediate delivery surged $84.67, or 11 percent,
to $864.42 at 4:42 p.m. New York time. Spot silver was up
15 percent to $12.
The dollar fell 1.2 percent against a weighted basket of
the euro, yen and four other major currencies.
Financial `Catastrophe'
``When you're perhaps facing a catastrophe in the U.S.
financial market, investors are thinking: `Screw it. I'm
jumping back into the old faithful,''' said Joel Crane, a
metals strategist at Deutsche Bank AG in New York.
``Gold's relative value is cheap compared with the dollar.''
About $2.8 trillion of market value was erased from global
stocks this week as Lehman Brothers Holdings Inc. filed
for bankruptcy, Bank of America Corp. purchased Merrill
Lynch & Co. for $50 billion, and the U.S. government
took control of American International Group Inc. in an
$85 billion takeover to prevent the biggest financial
collapse ever.
Russia halted stock trading for a second day and poured
$44 billion into its three biggest banks in a bid to
halt the worst financial crisis in a decade.
``You're sorting out, by process of elimination, that
gold is the asset you'd rather own,'' said Greg Orrell,
who manages the OCM Mutual Fund at Orrell Capital
Management Inc. in Livermore, California. ``It's the
currency you'd prefer.''
Rates Plunge
U.S. Treasury three-month bill rates dropped to the
lowest since at least 1954. Investors pushed the rate
as low as 0.0304 percent.
``It's not even worth it to keep money in the bank,''
said John Licata, the chief investment strategist at
Blue Phoenix Inc. in New York. ``Gold is going to be
the beneficiary of a global move toward a safe haven.''
Reserve Primary Fund, the oldest U.S. money-market
fund, yesterday became the first in 14 years to expose
investors to losses after writing off $785 million of
debt issued by Lehman.
``That's systemically scary,'' said Frank McGhee, the
head dealer of Integrated Brokerage Services LLC in
Chicago. ``Unless you put gold in your backyard, you
have to trust your money to an institution.''
Gold's gains accelerated after prices topped $800,
analysts said.
``There are going to be more banks that will fail,''
said Matt Zeman, a metals trader at LaSalle Futures
Group Inc. in Chicago. ``This is the time when people
want to buy gold.''
London-based researcher GFMS Ltd. said gold may rise
to $950 by the end of the year as central banks and
mining companies hold back sales and investors buy
the metal as a haven against falling equities.
Mortgage Meltdown
Since the second quarter of 2007, banks worldwide
have posted $517.7 billion in losses and writedowns
related to investments in subprime mortgages. The
Fed has also engineered $200 billion in takeovers
for Fannie Mae and Freddie Mac, the biggest providers
of financing for U.S. homes.
The world's central banks, already the biggest
holders of gold, may look to the metal as an
alternative reserve asset to the dollar, said
Dennis Gartman, an economist and the editor of the
Gartman Letter in Suffolk, Virginia. Until today,
Gartman had been bearish in his outlook for gold.
Venezuela said today it may buy 15 metric tons of
gold a year to develop investment products,
including coins. At a conference in London, Maria
Ramona Gertrudes Santiago, the managing director of
the treasury at the Phillipines Central Bank, called
gold a ``perfect hedge.''
Sales of gold by European central banks may total
365 metric tons in the year through Sept. 26,
below the cap of 500 tons, the World Gold Council
said yesterday. That would mark the lowest amount
since the banks agreed to sell the metal in 1999.
To contact the reporter on this story: Pham-Duy
Nguyen in Seattle at png...@bloomberg.net.
Last Updated: September 17, 2008 16:44 EDT
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