Gold, the traditional safe haven in times of economic turmoil, proved to be more a commodity that everyone loved to hate last year even amid the turbulence that engulfed world markets.
But as 2009 gets under way the yellow metal has found huge traction with money managers.
In the last eight sessions, gold has rallied as much as $100 (70 pounds) an ounce to hit a near four-month high of $915.30 on Monday -- in spite of a rising dollar.
The furious rally in the bullion stems from expectations that the U.S. government will need to borrow about $2 trillion of debt this year to finance its rescue packages for the battered banking sector. Already, outstanding Treasury debt stood at $5.5 trillion at the end of September.
Against this backdrop, investors are largely shunning everything from U.S. Treasuries to stocks, which are down 10 percent and 7.5 percent so far this year, respectively, while pouring cash into gold.
"I think gold is rising because of fiscal deterioration and the prospect that the U.S. may be downgraded," said Tom Sowanick, chief investment officer for $22 billion in assets at Clearbrook Financial LLC in Princeton, New Jersey.
On January 13, credit rating agency Standard & Poor's said that the ballooning costs of rescuing U.S. banks and auto companies, combined with a massive fiscal stimulus plan by President Barack Obama "will lead to (a) noticeable deterioration in the U.S. fiscal profile."
"They are printing trillions of dollars worth of currencies, and there is no real asset behind it. So every single dollar in my pocket is going to be worth less and less every day," said Robert Lutts, chief investment officer of $400 million Cabot Money Management in Salem, Massachusetts.
