Cocky investors were dumping gold and buying in to equities, showing that safe havens are out and riskier assets are in. The move out of the precious metal and into equities sent its price to a sixth-month low, below $1,600 an ounce, while the FTSE 100 index reached a five-year high.
Gold may be out but analysts at Goldman Sachs reckon it could still be worth buying gold miners. They like the look of Egypt's Centamin, which they think has "growth nearing completion and strong cash flow on the way".
Centamin has had its fair share of problems stemming from licensing and permit rights in Egypt, and there is a court case pending on this issue. But the analysts think the shares trade at a "significant discount to the West African junior gold stocks".
Although there are risks to operating in Egypt, its Sukari mine is one of the most significant gold deposits in the world with more than 20 years' production. Goldman predicts that "the Egyptian political situation will settle over time, and the country will seek to reinforce and attract foreign investment", meaning the value of its mine will eventually be reflected in the share price.
Goldman reduced its share-price target to 130p from 160p but rated the stock a buy and a "top pick". However, the shares were tarnished by the falling gold price in the short term, and lost 2.4p to 55.8p.
As gold and sterling fell, the mad dash for equities pushed the benchmark FTSE 100 index to above 6,400 – its highest since January 2008 – before it fell back slightly during the afternoon session. Despite going ex-dividend, the Footsie ended up 16.3 points at 6,395.37.
Investors piled in as the pound tumbled to an eight-month low after the Bank of England's Governor, Sir Mervyn King, backed more quantitative easing.
One trader declared there was a "return to confidence" in equities. But others were issuing words of caution. Michael Hewson, a senior market analyst at CMC Markets UK, said stocks will return to their long-term average, and many are more than 10 per cent above this at current prices. He added: "History tells us that this is simply not sustainable and while a crash is probably not imminent, and is incredibly difficult to predict, the market is being remarkably complacent about the likelihood of one not occurring at some point in the future on a lot of stocks. The only way for this to get worked out is for the market to trade sideways for an extended period, or for us to get a sharp fall before heading higher again."
But one City trader admitted: "The world is still bankrupt, but nobody seems to care. Fund managers and pension funds are sitting on mountains of cash, and it has to go somewhere."
Stocks that were on the up included drinks-cans maker Rexam, which reported strong sales and the shares gulped up a 25.3p advance to 502p.
Investec's analysts took another look at soap, soup and ice cream maker Unilever and said that, although the shares have had a strong run, they expect the success to continue, with "potential for margins to surprise positively in the coming year".
They gave the stock a buy recommendation with a 2,900p price target, and the shares responded with a 41p rise to 2,652p.
At the other end of the table, RSA Insurance, once known as Royal & Sun Alliance, slumped 19.3p to 117p after it announced that it is cutting its dividend for the first time in 10 years. Concerns on what this meant for the wider insurance market sent rival Aviva down 15.2p to 354p.
There was a small victory for oil giant BP. A US judge ruled the 810,000 barrels of oil it captured from the Gulf of Mexico oil disaster in 2010 should be excluded from the potential penalties it faces.
This means the huge fines it will have to pay could be slightly reduced. The shares put on 1.4p to 447.75p.
Telecoms giant Vodafone, down 1p to 162.5p, was still weak after a downgrade from analysts at Bernstein Research on Tuesday. Vodafone is rumoured to be planning a bid for Kabel Deutschland, and is said to have sought advice from Goldman Sachs.
But Andreas Siemen, Kabel's finance boss, declined to comment on any contact with Vodafone regarding a deal. Its plans to raise its dividend were also seen as a defensive move against any bid.
Over on AIM, tiddler Northcote Energy, the onshore US oil and gas explorer, said it will up its production in Oklahoma, extending its ownership in a new prospect and will deepen an existing well and the shares trickled up 0.1p to 1.65p.