Seems the record gold price has finally woken up the near comatose western media about gold's wealth preservation attributes and the parlour state of the world economy. As usual for such article the best and most informed critique is to be found in the comments section. Please go to the story link and read the excellent comment from "lucdog" and note even this blog's author gets a mention under "totm" :-)
From the UK Telegraph: Gold hit $1,269.45 on the London Bullion Market on Tuesday afternoon, beating the previous record of $1,265.30 struck on June 21.
"Renewed sovereign debt concerns" have driven up gold, said Robin Bhar, senior metals analyst at Credit Agricole bank. Fears of a resurgent eurozone debt crisis are likely to stunt European economic growth prospects this year, the EU warned on Monday.
"The global recovery is still expected to be uneven and is surrounded by major uncertainties," the European Commission said in its autumn forecast, citing "the resurfacing of global imbalances, high debt levels and lingering tensions in sovereign-debt markets".
Gold, whose two main drivers are jewellery and investment buyers, is also regarded as a good store of value in times of high inflation.
Amid rising bullion prices, the International Monetary Fund last week said it was selling gold worth around $403m to Bangladesh. The Washington-based institution has been selling gold as it seeks to bolster its finances amid the global economic crisis.
IMF members agreed in 2008 that the fund could sell an eighth of its gold assets in order to diversify its financial model. The fund is one of the world's largest holders of the precious metal.
Jeremy Cook, the chief economist of World First, the currency broker, said: "The recent upsurge in gold is down to a couple of things.
"Primarily, it's a hedge against uncertainty. Stock markets are still vulnerable and government debt, in some cases, cannot be trusted, so market participants are flooding into the yellow metal as fears over the global recovery continue.
"Secondly, it follows a huge move higher in silver, which is up over 20pc since the beginning of the year on the back of supply concerns." ......link to story