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Gold Rises Most in 8 Years as Investors Seek Haven From Turmoil
Posted By admin On September 17, 2008 @ 10:45 am In Featured Stories | Comments Disabled
Wednesday, September 17, 2008
Sept. 17 (Bloomberg) — Gold surged the most in eight years as investors sought the safety of precious metals on concern that the credit crisis will deepen, leading more financial institutions to fail. Silver jumped more than 8 percent.
The U.S. government took control of American International Group Inc. in an $85 billion takeover to prevent the biggest financial collapse ever. The cost of borrowing dollars for three months jumped the most since 1999 as banks hoarded cash. In March, gold reached a record after the Federal Reserve backed JPMorgan Chase & Co.’s purchase of Bear Stearns Cos.
“Gold is going to be the beneficiary of a global move toward a safe haven,” said John Licata, the chief investment strategist at Blue Phoenix Inc. in New York. “There’s a gigantic fear factor. Most people are concerned another bank is going to fail.”
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Gold futures for December delivery gained $60.60, or 7.8 percent, to $841.10 an ounce at 12:01 p.m. on the Comex division of the New York Mercantile Exchange. A close at that price would mark the biggest gain for a most-active contract since Feb. 4, 2000.
Silver futures for December delivery rose 78.8 cents, or 7.5 percent, to $11.305 an ounce on the Comex, after earlier rising as much as 92.3 cents to $11.44. Before today, gold fell 6.9 percent this year, while silver tumbled 30 percent.
U.S. Treasury three-month bill rates dropped to the lowest since at least 1954. Shareholders of Reserve Primary Fund, which wrote off $785 million of debt issued by Lehman Brothers Holdings Inc., pulled more than 60 percent of the fund’s $64.8 billion in assets in the two days since Lehman filed for bankruptcy protection.
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