Precious metals prices skyrocket

Tom Stundza, Executive Editor -- Purchasing, 4/12/2006 2:00:00 AM

Gold and silver prices have hit two-decade peaks this week because investors are using precious metals as protection against rising inflation. Gold is selling right around $600/oz, a 25-year high, while silver is at a 23-year peak of $13/oz.

Precious metals price gains have been driven by surging oil prices, tense U.S.-Iran relations and growing demand from developing nations. Investors have been attracted by the fact that the metal is offering better returns than either stocks or bonds, and provides protection against accelerating inflation and political instability. Gold has already risen 16% this year, adding $100 to the price of an ounce over the past four months. Gold producers have been failing to keep up with rising demand worldwide. Now, supply shortages have worsened as a number of central banks are rumored to be shifting out of their dollar holdings and into gold.

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