Strong demand for gold drove prices for the precious metal to record highs today, even as stocks sank and Washington remained mired in debate over what to do about the nation's debt ceiling.
The price of gold is being driven up by the debt deadlock in Washington, said one expert.
"Investor confidence isn't there," says Jonathan Corpina, senior managing partner of Meridian Equity Partners in New York City. "People are looking at the debt debate and not getting any new information. What we're seeing is impatience, I think. It's time for the politicians to put party aside and find some sort of resolution."
Uncertainty, he says, is always bad for markets. "Investors flee the market when there's uncertainty." Their move into gold is "the same thing as if they were putting their money underneath their mattress."
As for traders, the same holds true, Corpina thinks. "Volatility is high right now. They'll wait to get back into the market until they get more information."
Though today's price per ounce closed at $1,602.40, an all time high, Corpina says gold's price "will continue that way" until Washington resolves its crisis.
He said traders are also spooked by unemployment, which Corpina calls "all-important." Despite the government's stimulus efforts, "We haven't seen the unemployment numbers move in the direction we want."
People turning to gold, he thinks, are doing the right thing.
"You need to have a balanced portfolio," and having some of your money in gold is a way to diversify. Plus, gold always has had the status as a safe haven.
"It's one of the safest bets out there. The value has always been there. On Main Street, people see its value rising higher. They're no longer sure that cash is their safest bet," Corpina said.
Investor confidence, he predicts, will return. "It'll be back, but only after this debt debate has been resolved." For now, though, "It's a cloud hanging over us."