Gold priced in Euros, British pounds and Swiss francs all rallied to all-time highs on concern that a plan to rescue Europe’s indebted nations will slow the region’s economic recovery and devalue the 16-nation common currency.
Europeans are leading the drive to gold as the euro continues to lose value“. Gold is expensive, but people in the euro zone are moving out of their currencies and forcing themselves into gold,” said Adam Klopfenstein, a senior market strategist at Lind-Waldock in Chicago. “There’s a lot of fear on the part of the Europeans that moves to mitigate their debt crisis will only lead to more problems. People want to be in the currency of last resort.”
The Euro has dropped 12 percent against the dollar this year on concern that budget deficits in Greece, Spain and Portugal will escalate. Over the weekend, the European Union and the International Monetary Fund announced a rescue package of almost $1 trillion.
“The whole bailout is quantitative easing across all of Europe,” said Michael Guido, the director of hedge-fund sales at Macquarie Bank Ltd. in New York. “You’re seeing this big rush into gold ETFs, physical bars and coins out of Europe that’s supporting the thesis that gold is the default currency.”
As a result, Gold has gained another 13 percent this year following nine straight annual gains. The metal has outperformed stocks, bonds and other commodities in 2010.
“All we can do right now is to put our money into real assets, because paper money everywhere is being debased,” Jim Rogers, the chairman of Rogers Holdings in Singapore, said in an interview on Bloomberg Television. The Gold rocket is lit and ready for blast off!