Gold has resumed its traditional role as the safest of havens amid times of uncertainty. Well, times are uncertain to the extreme with few willing to trust banks grasp on their risk. Both AIG and Lehman ended up having far more risk than even their managements understood, if media reports are to be believed. If insiders don’t understand the risks, the reasoning goes, why should outsiders. Credit default swaps are soaring as investors rush to insure against default by even the most prime names in the business, and paying fat prices to do so.
Gold is up $50 on the day, well above $800/oz, now at $830. Oil, in turn is lower by more than a dollar after inventory data.
