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'Risky' yesterday, gold is 'safe haven' today
Gold, Silver Gain as Investors Seek Haven From Subprime Losses
By Pham-Duy Nguyen
Bloomberg News Service
Friday, August 10, 2007
Gold and silver rose in New York as investors sought a haven from potential losses tied to the U.S. subprime-mortgage collapse.
Stocks dropped in Europe and Asia after central banks around the world added billions of dollars to the global financial system to help meet demand for cash. Before today, gold had risen 5.5 percent this year after six annual gains.
"People are going to the safest thing they can get," said Marty McNeill, a trader at R.F. Lafferty Inc. in New York. "Gold is a safe haven at this point."
Gold futures for December delivery rose $3.80, or 0.6 percent, to $676.60 an ounce at 9:01 a.m. on the Comex division of the New York Mercantile Exchange.
Silver futures for September delivery rose 7.5 cents, or 0.6 percent, to $12.78 an ounce. Before today, the metal had fallen 1.8 percent this year.
The European Central Bank loaned 61.05 billion euros ($83.6 billion), adding funds into the banking system for a second day after U.S. subprime-mortgage losses prompted lenders to tighten credit. The Bank of Japan, the Reserve Bank of Australia and central banks in Canada, Norway, and Switzerland also injected money into the financial system.
The U.S. Federal Reserve added $24 billion in temporary reserves yesterday, when gold fell the most in two months as investors sold bullion to cover losses in other markets.
"Gold is considered one of the traditional stores of value during crisis periods," said Stuart Flerlage, who helps manage more than $600 million in commodity investments at NuWave Investment Corp. in New York. "While there is some short-term selling, this is a function of investors needing liquidity to assist parts of their portfolios which are not doing well."
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