The price of gold shot up to a record high Monday as traders abandoned other safe haven investments -- the ones governments can control -- for the world's oldest and most independent form of wealth.
The U.S. dollar has been falling in value all year and Monday it resumed its decline on growing speculation the Federal Reserve's leader will signal in a speech Friday a readiness to more Treasury assets, the world's No. 1 safe haven investment, to prop up the flagging American economy. The greenback was down on the ICE US Dollar index 0.258 percent as was the price of 10-year notes.
The Japanese yen, another safe haven, retreated from its record against the U.S. dollar on expectations that the Japanese, who depend heavily on exports, would take steps to weaken the currency. In Switzerland, meanwhile, investors watched for intervention by the Swiss National Bank to cut the sky high value of the franc, heretofore a popular choice among investors seeking to avoid the downdraft in other currencies and the stock market.
Besides the loss of competition for gold, which hit a record early Monday of $1,898.60 per ounce, other factors lifted the precious metal.
The U.S. economy is near zero growth and flirting with the possibility of a double dip recession while European leaders appear paralyzed in their efforts to stanch the financial crisis that began in Greece and has now infected Italy and France. Analysts increasingly see only two choices: cut weak members of the euro zone off or create a financial union that is truly singular.
Neither possibility seems within the grasp of Europe's leaders, adding to the nervousness that has lifted gold 33 percent this year alone.