Gold Beats Financial Assets as Global Distrust of Central Bankers (Bloomberg)
Gold Beats Financial Assets as Investors Seek Haven
Bloomberg reports 03 March 08:
*Gold, silver, platinum and palladium may be the best-performing financial assets this year as inflation and slowing growth erode the value of the world's major currencies, bonds and stocks.
* Precious metals have risen at least twice as fast as the euro and yen in 2008 and returned six to 20 times as much as U.S. Treasuries. The Standard & Poor's 500 Index and all other major gauges of equities are down. Gold for immediate delivery reached an all-time high of $984.95 an ounce today, while silver traded at $20.19, the most expensive since 1980.
* Investors are using metals to preserve their buying power as the U.S. dollar falls to a record and inflation accelerates. Gold, platinum and palladium may gain at least 30 percent this year as Federal Reserve Chairman Ben S. Bernanke prioritizes cutting interest rates over controlling consumer prices
* Gold rose 36 percent since Sept. 18, when Bernanke made the first of five cuts to the target rate for overnight loans between banks in order to stave off a U.S. recession. It's up 15 percent since breaking the 1980 record in January, and may rise to $1,300 an ounce by yearend, Goodis said.
* Platinum and palladium -- sister metals used to make jewelry, catalytic converters for cars, and dental crowns and bridges -- have advanced even more this year.
* Platinum futures in New York gained 42 percent and touched a record $2,214.50 an ounce year.
* Palladium will probably reach $750 an ounce by June, a 29 percent gain from the current price, he said.
* Silver will advance to $25 an ounce sometime this year, estimated David Davis, an analyst at Credit Suisse Standard Securities in Johannesburg.
* Bernanke lowered rates faster than any Fed chairman since 1982, and inflation in 2007 jumped 4.1 percent, the most in 17 years. U.S. housing starts in December fell to the lowest level since 1991, and fallout from the collapse of the U.S. subprime mortgage market has triggered about $181 billion in writedowns and credit losses at the world's largest financial firms.
* At least 95 percent of the new buyers have kept their money in the bullion, Mark O'Byrne, Gold & Silver's executive director, said in an interview on Feb. 26.
``They were very, very nervous and wanted security,'' O'Byrne said. ``Some were putting their entire savings into gold. They were that nervous.''