Gold Becoming a Hedge Against 'Monetary Uncertainty'

Gold is a different kind of hedge these days. It's closing in on $1,400 an ounce again and setting another new record when priced in euros.

The reason? This precious metal isn't serving as a hedge against inflation, as traditionally has been the case. Instead, as investment guru Dennis Gartman points out, investors see gold as "a hedge against monetary uncertainty."

Eurozone debt problems appear likely to widen and intensify. BBH currency strategist Win Thin says, "Troubles in the euro zone periphery have spread to the core," with Belgium and France now coming under pressure.

So, central banks don't know if they can count on the Euro for their reserves, especially since it has fallen below the technically and psychologically significant $1.30 level.

As Gartman writes: "U.S. dollars and dollar-denominated debt might be of interest but in the case of the People's Bank of China, it's dollar-denominated reserves are already problematically high."
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