Gold Rides High on the Foreign Exchange Roller Coaster

Meet the world's newest No. 5 gold miner: Australia's Newcrest Mining is buying Papua New Guinea-based Lihir Gold for about $8.8 billion—another sign of gold's unstoppable momentum at a time when no currency in the world looks safe enough for investors.

Gold has been riding a tidal wave, hitting an all-time high yesterday in pound sterling terms in London. It closed at a five-month high in New York, getting to $1,183, with the $1,200 line expected to be breached very soon.

The ongoing Greek bailout dramedy, fears of a contagion through the rest of a wobbly Europe, worries over a hung Parliament in the U.K., and the resulting Forex volatility is pushing more and more investors into the arms of increasingly appealing bullion.

According to the London Telegraph, demand from investors recently overtook demand for gold jewelry for the first time since 1980, thanks to the growth of exchange-traded funds that allow investors to bet on gold prices without physical ownership.

"Gold is not just viewed as an inflation hedge in the current market," George Davis, chief technical analyst at RBC Capital Markets, told the Financial Post. "Given the euro region sovereign risk emanating from Greece, gold is also being used as a hedge against a potential financial crisis."

"Gold is sort of the anticurrency," says Nick Barisheff, president and CEO of Bullion Management Group. "A lot of people think the gold price is rising, but you could argue that many of the currencies are just declining."

Which is why some have come to consider gold simply as a better, stronger currency. As Forex Blog bluntly says: "This crisis has affected the way that investors think about gold; while previously it was primarily viewed as an inflation hedge, now it is seen as a hedge against fiscal or financial crisis. In this regard, it has assumed the characteristics of a 'safe haven' currency, much like the U.S. dollar."