Sources close to Cornerstone Worldwide, said the firm is expecting gold to extend its recent gains after news emerged that the US government has come to the aid of Citigroup with another $20bn from the TARP (Troubled Asset Relief Program).
The new cash injection follows the $25bn that Citigroup received from the TARP recently. In addition to the $20bn, the US government announced it would offer an explicit guarantee to cover some $300bn in illiquid assets on Citigroup’s balance sheet.
A source close to Cornerstone Worldwide said that although many of the mortgage-backed securities the government has covered are not particularly risky, it should be noted that even so-called prime loans were beginning to default as the economic woes afflicting the world’s largest economy worsen.
The Cornerstone Worldwide source reportedly suggested that the continuing crisis in the global financial markets had seen demand for gold soar to record levels and that it was likely that its price in dollars would soon exceed $1000 per ounce.
