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Cash May Be King, But Gold Is, Well, Gold

September 15, 2010

Gold leaped to a new high, staging its biggest gain since February, amid worries that the Federal Reserve may be forced to step in to further prop up the economy, the WSJournal reports.  The market gyrations came after Goldman Sachs suggested the Federal Reserve could purchase $1 trillion of Treasurys as soon as November to bolster the U.S. recovery.  The prospect of renewed monetary easing revived worries about economic instability, which has been a recent trigger for gold buying.

"Safe-haven [gold] demand is continuing, as there are increasing doubts about the robustness of the recent economic recovery and concerns that markets may be subject to further turmoil."  -- Mark O'Byrne of GoldCore, a bullion dealer.

Bullion is now up 16% for the year.  Gold-mining stocks also soared, bucking a negative trend in the stock market.  [WSJournal, 9/16]