By Pham-Duy Nguyen

Sept. 17 (Bloomberg) — Gold surged the most in nine years as investors sought the safety of precious metals on concern that the credit crisis will deepen, leading more financial institutions to fail. Silver soared the most since 1979.

Equities tumbled after the Federal Reserve took over the biggest U.S. insurer. The cost of borrowing dollars for three months jumped the most since 1999 as banks hoarded cash. Central banks in the Phillipines and Venezuela said they may buy gold. In March, the metal reached a record as the government steered JPMorgan Chase & Co. to buy Bear Stearns Cos.

“People are worried about money being safe in a bank,” said Ron Goodis, the futures trading director at Equidex Brokerage Inc. in Closter, New Jersey. “With paper assets in question, gold represents the textbook storehouse of value.”

Gold futures for December delivery gained $70, or 9 percent, to $850.50 an ounce on the Comex division of the New York Mercantile Exchange. The dollar increase was a record for a most-active contract, and the percentage gain was the biggest since Sept. 28, 1999. The metal reached the all-time high $1,033.90 on March 17.

Silver futures for December delivery rose $1.158, or 11 percent, to $11.675 an ounce, the biggest gain since Dec. 31, 1979. Gold is up 1.5 percent this year, while silver still is down 22 percent.

Gold for immediate delivery surged $84.67, or 11 percent, to $864.42 at 4:42 p.m. New York time. Spot silver was up 15 percent to $12. The dollar fell 1.2 percent against a weighted basket of the euro, yen and four other major currencies.
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