David Prosser: Gold sends the world a worrying message

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Outlook Two years to the day exactly since Lehman Brothers formally applied for Chapter 11 bankruptcy protection, it seems an appropriate moment to ponder whether the world has put the financial crisis behind it. That the gold price posted an all-time high yesterday suggests the answer is a pretty straightforward "no".

Gold is only at a nominal high, of course, and the recent weakness of the dollar gives the price an artificial lift. Yet there is no avoiding the fact that demand for the world's favoured safe-haven asset has rarely been higher. Certain risk indicators in the credit markets may have returned to levels seen before the crunch and equity markets may have regained the ground they lost in the aftermath of the crisis, but the demand for gold underlines the acute sense of nervousness investors continue to feel.

Moreover, while gold is a globally traded asset, what should concern us here in the UK is that jitters about the eurozone appear to be behind the most recent price spike. Black Swan Capital points out that there is a clear correlation between the rising gold price of recent months and the rising yields on the sovereign debt of eurozone countries deemed less financially secure. That record gold price, in other words, reflects a specific fear that while the eurozone debt crisis may have faded from the headlines, it may yet return.