PARIS, September 9, 2009 (AFP) – Gold is back in favour, hitting 18-month highs above 1,000 dollars as investors hedge their bets on the dollar in a global economy struggling out of its worst slump in decades, analysts said.
Gold is the ultimate store of value when all else fails and in uncertain times like these, there is nothing better.
“Gold is the best, the natural hedge against everything — wars, inflation,” said Andrey Kryuchenkov of VTB Capital in London.
“The markets are uncertain, undecided on the dollar,” he added.
Gold’s gains look at first sight somewhat surprising — investors are said to be more confident, taking on more risk as a global recovery emerges, putting their money into riskier assets such as stocks.
But underlying the new optimism are clear concerns the recovery will prove difficult and weak, and that the huge economic stimulus programmes put in place to support growth will have to stay in place for years longer than planned.
Those stimulus packages are funded by governments borrowing trillions of dollars and supplemented by unorthodox measures, including the printing of new money, all of which undermine accepted norms of sound financial management.
In that light,