NEW YORK (CNNMoney.com) -- Gold powered through $1,100 an ounce Friday after the U.S. government said the nation's unemployment rate rose more than expected last month, fueling demand for the metal as a safe haven.

December gold jumped $7.80 to 1,097.10 an ounce after surging to an all-time high of $1,101.90 an ounce earlier.

Prices spiked after the Labor Department said the unemployment rate rose to 10.2% in October from 9.8% the month before. That marks the highest level since April 1983. Economists had forecast an increase to 9.9%.

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•         "The fall in the U.S. dollar seems to be pushing all the central banks to strengthen their portfolio with gold," said N.R. Bhanumurthy, professor at the National Institute of Public Finance and Policy in New Delhi. "Gold is a safe store of value compared to the U.S. dollar."
 
•         "The most important thing is that people want gold even at these prices," said Ghee Peh, head of mining research, with UBS AG in Hong Kong. "There's good support for prices for now" from the IMF’s disposal of bullion, he said.
 
•         "There seems to be consensus among the central banks that it’s better to cut down on currency holdings and diversify into assets like gold, which has upside potential," Krishna Reddy, a precious metal analyst at Way2Wealth Commodities Pvt., said in Mumbai. "The Reserve Bank of India gold purchase is a clear reflection of this belief."
 
•         "Gold production has been declining for the past seven years, while demand, particularly the investment demand, has been growing steadily," Way2Wealth’s Reddy said. "Central banks and even ordinary investors want to own more gold."
 

Nov. 3 (Bloomberg) -- Gold jumped to a record after India's central bank bought 200 metric tons of the metal from the International Monetary Fund, heightening speculation that there may be more official purchases.

Gold futures for December delivery rose to a record $1,088.50 an ounce at about 2:22 p.m. in after-hours trading on the New York Mercantile Exchange’s Comex unit. Earlier, the most-active contract settled at $1,084.90, up $30.90, or 2.9 percent. It was the biggest gain since March 19.

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Wall Street Journal
October 26, 2009

Odd Couple:  Stocks, Gold Share Same Ride Higher

•    David Einhorn, who oversees about $6 billion at New York hedge fund Greenlight Capital, last week told a New York investment conference that, before the financial crisis began in earnest last year, he shared the skeptics' view of gold as a metal of little intrinsic value outside dentistry, jewelry and some specialized electronics uses.  "The recent crisis has changed my view," he said.

•    "My instinct is to want to short the dollar," Mr. Einhorn said, "But then I look at the other major currencies.   The euro, the yen and the British pound might be worse.  So, I conclude that picking one of these currencies is like choosing my favorite dental procedure.  And I decide holding gold is better than holding cash."  He has been buying gold since last year, as have a number of other managers of large hedge funds.

•    John Paulson, the hedge-fund manager who made a fortune betting against subprime mortgages and financial companies, who oversees about $29 billion, has become a major gold investor in the past year using an exchange-traded fund that tracks gold, regulatory filings indicate.

•    Marc Stern, who helps oversee $55 billion as chief investment officer at Bessemer Trust, has about 1% of those assets, or $550 million, in gold as part of a hedge against future inflation, along with other anti-inflation investments

•    Gold has done well in periods of economic and financial difficulty, such as the 1970s, when the dollar was weak, inflation was high, and confidence in government was low.

The dollar fell to yet another 14-month low overnight, possibly on news of better-than-expected growth in South Korea, or maybe due to comments from a top Chinese banker and academic urging China to diversify away from the greenback, and to buy more euros and yen.

The FDIC closed 7 banks on Friday and rescued them from absolute failure. This now puts the total number of bank failures during 2009 past the 100 mark with 106 being the official number.  One of these banks had to write down assets as much as 43%.  You have to ask: What is the actual value of assets in our nation's banks - including the really big ones like Bank of America, Citibank, JP Morgan and Wells Fargo?

Rep. Barney Frank, the chairman of the House Financial Services Committee, may introduce a bill as early as this week to help the government seize the assets of troubled banks, fire bosses, and alter the terms of existing loans held by financial institutions, an official told The New York Times Sunday. Treasury Secretary Tim Geithner is expected to endorse the changes Tuesday.

Capmark Financial Group Inc., the lender owned by companies including Goldman Sachs Group Inc. and KKR & Co., filed for bankruptcy protection after posting a second-quarter loss of about $1.6 billion.  Capmark, based in Horsham, Pennsylvania, is one of the largest U.S. commercial real estate finance companies, with more than $10 billion in originations.