STEVE CHIOTAKIS: Well the saying goes all that glitters is gold. And after the big ups and downs of the stock market lately, apparently that glitter is a safe place for people to put their money. Here's the theory -- gold is in limited supply and will hold its value even if the global economy were to melt down. Today, an ounce of the stuff will cost you more than $1,750.
With us from London, which just happens to be the center of the gold trading market, is Marketplace's Stephen Beard. Hello, Stephen.
STEPHEN BEARD: Hello, Steve.
CHIOTAKIS: So, what exactly caused this latest spike in gold prices?
BEARD: Well in part, it was yesterdays unprecedented pledge by the Fed to keep interest rates close to zero for at least two years. The Fed said that to convince everyone that money would stay cheap in the U.S. -- it wouldn't slide back into recession. That's boosted stock markets, but it hasn't raised confidence in the dollar. After all, if you have U.S. inflation at almost 3 percent, but the U.S. interest rates are well below that, holding dollars doesn't make a lot of sense. Investors are buying gold because they distrust paper currencies. They believe the dollar is being devalued -- the Euro, the other big reserve currency may not survive because of the Eurozone debt problem. So buying gold, they're buying it as the oldest and the ultimate safe haven.
CHIOTAKIS: I'm curious, Stephen, if people are buying all this gold, where are they putting it?
BEARD: In special vaults -- and the cost of putting it there is soaring. That's because as the price of gold has jumped, so has the cost of insuring it. The Financial Times this morning says the cost is rising because London's running out of storage space. But that's not true, according to Paul Tustain, he's the boss of a company called Bullion Vault which trades in gold. And he said given the huge value provided by the weight of gold, it would be difficult to run out of storage space.
PAUL TUSTAIN: Bullion vault is the biggest storer of privately held bullion in Europe. All our gold, which is well worth a billion dollars and would fit under the desk that I am currently sitting at.
BEARD: Of course, it's not under his desk, it's in a stainless steel enforced, highly guarded steel vault.
CHIOTAKIS: I'm sure it is. Marketplace's Stephen Beard in London. Stephen, thank you.
BEARD: OK, Steve.