(AXcess News) New York - Investors unsure over the timing of the US government's bailout plan for the financial sector moved into gold and silver futures Monday after stocks began falling.
'Flight to safety' seemed to be the key thought underlying investors moving into precious metals early Monday afternoon after the Dow dropped more than 224 points as politicians looked to take advantage of the financial crisis in the wake of the presidential elections by focusing on the taxpayer liability surrounding the financial bailout of Wall Street by the government.
Gold futures for December delivery in New York rose $36.50 per ounce by 1:30pm EST Monday to trade at $901.20 per ounce.
Silver futures followed gold higher, rising 92 cents per ounce to $13.39.
October Platinum rose $9.40 trade at $1,147.00 per ounce.
Behind the surge in precious metals prices is a growing doubt over the credit crisis that's gripped Wall Street which U.S. Treasury Secretary Henry Paulson says has to be dealt with immediately despite the cost as 'doing nothing would be disastrous'. So far, the financial meltdown has been looked upon as the worst since the Great Depression. Commodity prices across the board are moving higher as a result with crude oil, base metals and grains rising in the U.S. marketplace.
Some metals pundits are saying gold is heading back to its previous $1,000 per ounce level while doomsday sooth sayers like Gerald Celente say the economy is heading for a bottom the likes the world has never seen.
According to Celente, the worst is yet to come, and it's going to go global. He said, that the old adage, 'when America sneezes the rest of the world catches pneumonia,' holds truer than the newly minted "de-coupling" theory that global growth can be sustained absent a strong US marketplace. "Equity markets worldwide have collapsed and there is nothing in place that will support them," said Celente.
AXcess News' Washington correspondent and economist, Ms. Freddie Mooche, says things bad, but it's not the end of the world market as some might have you believe. "The market is in a state of flux and the outcome will be a shift in the way business is conducted with more regional investment banking, manufacturing and retail growth as foreign banks become more involved in the U.S. financial marketplace," said Ms. Mooche. That move evidenced itself this morning when Morgan Stanley (NYSE: MS) announced it signed a letter of intent with Mitsubishi UFJ Financial Group Inc. (NYSE: MTU; JP: 8306), a Japan-based international bank holding company, to sell the Japanese bank a 900 billion yen stake in the company.
Morgan Stanley and Goldman Sachs (NYSE: GS) both announced becoming bank holding companies over the weekend which would afford them both some protection through the Federal Reserve. Democrats have been building on the argument that the taxpayers are picking up the tab for Wall Street's problems and a political stall seems to be building in balking at Paulson's plan to bailout the financial sector with $700 billion in taxpayer money instead of taking it from the companies that profited from what they see as financial rape of taxpayers.
Investors on Monday, unsure of the outcome bailed out of the equities market in favor of precious metals and oil as the dollar showed continuing signs of weakness and economic doubt.
The dollar was weaker Monday against the euro and yen, which added fuel to investors moving into gold and silver futures.
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