Investors Seek Refuge from Financial Tsunami.- Gold Soars

Sept. 17 (Bloomberg) -- Gold surged the most in nine years as investors sought the safety of precious metals on concern that the credit crisis will deepen, leading more financial institutions to fail. Silver soared the most since 1979.

``People are worried about money being safe in a bank,'' said Ron Goodis, the futures trading director at Equidex Brokerage Inc. in Closter, New Jersey. ``With paper assets in question, gold represents the textbook storehouse of value.''

``When you're perhaps facing a catastrophe in the U.S. financial market, investors are thinking: `Screw it. I'm jumping back into the old faithful,''' said Joel Crane, a metals strategist at Deutsche Bank AG in New York. ``Gold's relative value is cheap compared with the dollar.''

Russia halted stock trading for a second day and poured $44 billion into its three biggest banks in a bid to halt the worst financial crisis in a decade.

``You're sorting out, by process of elimination, that gold is the asset you'd rather own,'' said Greg Orrell, who manages the OCM Mutual Fund at Orrell Capital Management Inc. in Livermore, California. ``It's the currency you'd prefer.''

U.S. Treasury three-month bill rates dropped to the lowest since at least 1954. Investors pushed the rate as low as 0.0304 percent.

``It's not even worth it to keep money in the bank,'' said John Licata, the chief investment strategist at Blue Phoenix Inc. in New York. ``Gold is going to be the beneficiary of a global move toward a safe haven.''

``That's systemically scary,'' said Frank McGhee, the head dealer of Integrated Brokerage Services LLC in Chicago. ``Unless you put gold in your backyard, you have to trust your money to an institution.''

Gold's gains accelerated after prices topped $800, analysts said.

``There are going to be more banks that will fail,'' said Matt Zeman, a metals trader at LaSalle Futures Group Inc. in Chicago. ``This is the time when people want to buy gold.''

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To contact the reporter on this story: Pham-Duy Nguyen in Seattle at pnguyen@bloomberg.net.