Gold hit a record spot price of $1,594 an ounce this week, with silver reaching as high as $39. As concern grew about debt, default and bailouts, analysts spoke of a return to the gold standard, The Telegraph reports.
Gold’s popularity was attributed to increasingly troubling economic news. In Europe, the RBS proposed a 3.5-trillion-euro rescue fund for Spain and Italy. In the US, fears grew about a possible third round of quantitative easing and what Moody’s called a “very small but rising risk” of imminent default. Inflation in China and India, meanwhile, further encouraged citizens to place their trust in gold.
World Bank President Robert Zoellick said it was time to “consider employing gold as an international reference point.” Utah now accepts gold as legal tender for tax payments and Switzerland is considering the creation of a gold franc as a parallel currency to its existing franc.
As Federal Reserve Chairman Ben Bernanke told US Congress this week, people buy gold “as protection against what we call tail risks—really, really bad outcomes.”
by Greg Klein