Investors are getting the Midas Touch.
The price of gold jumped to a record high of more than $1,700 an ounce Monday. As fears about the world's most important economies rose, investors switched from stocks to more stable precious metals.
"Investors are looking at gold as being the currency of choice in the market right now," said Will Rhind, managing director at ETF Securities. "It has really done what it is traditionally supposed to do in times of economic distress."
Concerns about the financial crises in Europe and the United States are pushing investors to diversify their portfolios. "They're trying to protect themselves from that by buying gold," Mr. Rhind said.
Last week, Standard & Poor's downgraded the United States' credit rating to AA+ from AAA. Moody's Investor Service warns it could do the same thing. This has led to concerns that the U.S. might not be able to pay all of its bills, even though Congress finally agreed to raise the debt ceiling in order to cover its debt in time for the Aug. 2 deadline.
To make matters worse, the stock market continues to tumble, and some wonder if the U.S. is heading into a double-dip recession.
All of this has paved the way for investors, who consider gold a "safe haven" because it doesn't fluctuate with a certain country's economic ripples, to switch to a more stable source of wealth, Mr. Rhind said.
"The supply of gold is unlike the supply of dollars. You can't print more gold. So you can't inflate gold. But any paper currency can be increased by a printing press."
As investors flocked to gold, the price soared $61.40, or 3.7 percent, and settled at $1,713.20, after reaching an all-time high of $1,723.40 earlier in the day.
Adjusted for inflation, however, gold had a greater value in 1980 when it peaked at $850, or $2,400 in today's dollars.
The price could continue to rise. Mr. Rhind said his clients expect it to be higher by the end of the year.
"Gold prices have good reason to be at these levels," he said. "The market supports prices at these levels."
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