Gold closed above $1,500 an ounce for the first time, as the dollar slid for a third straight day, driving a key index of the U.S. currency's value to its lowest level in almost three years.
Silver — like gold, a hard-money alternative to paper currencies — surged to a 31-year high. And in the stock market, the Dow industrials set a fresh multiyear high.
"It's a 'sell the dollar, buy everything else' market," said Win Thin, a currency strategist at Brown Bros. Harriman in New York.
The DXY index, which measures the dollar's value against six other major currencies (including the euro, the yen and the Swiss franc), slid 0.4% on Thursday to its lowest since August 2008. The index has lost 1.9% in the last three days and 6.2% year to date.
The euro hit a new 16-month high of $1.456 on Thursday, up from $1.451 on Wednesday. The dollar edged down to a record low against China's currency, dropping to 6.52 yuan. The dollar has fallen 1.3% against the yuan this year as Beijing has allowed its currency to steadily strengthen.
The buck's slump this year has been fueled in large part by a widening gulf between U.S. interest rates and rates abroad. While many foreign central banks are raising rates to combat inflation, the U.S. Federal Reserve is holding its benchmark rate near zero.
Money naturally flows toward higher-yielding assets, so the rate differential is bolstering other currencies at the dollar's expense.
On Wednesday, Brazil's central bank raised its key short-term rate to 12% from 11.75%. Brazil's currency, the real, rose to its strongest level against the dollar since August 2008: The buck now is worth just 1.566 reals, down 5.7% since the start of this year and down nearly 11% from a year earlier.
The dollar's continuing weakness means Americans' purchasing power abroad is sinking (good luck with that foreign dream vacation), but it's a boon for many U.S. exporters because it makes their goods less expensive for foreign buyers.
The stock market clearly thinks a falling dollar is a good thing: Wall Street rallied broadly for a third straight session Thursday. The Dow rose 52 points to 12,505, its highest level since June 2008.
Currency traders say the dollar's slide this week got a push from credit-rating firm Standard & Poor's, which warned it might downgrade U.S. Treasury debt from its current top AAA rating if the government fails to pare its massive deficits.
Although the dollar rose Monday as S&P's warning temporarily roiled global markets, driving some investors to the greenback as a haven, the U.S. currency has been falling since then.
Matt Zeman, a metal trader at Kingsview Financial in Chicago, said gold and silver have been prime beneficiaries of S&P's threat. "People are saying, 'We really are in trouble. I need to get my hands on some hard assets,' " Zeman said.
Gold futures for April delivery rose $4.90, or 0.3%, in New York on Thursday to a record $1,503.20.
But silver remains the star in the precious metals market: April futures rocketed $1.60, or 3.6%, to $46.06 an ounce, the highest price since the spike of late 1979 and early 1980, when the Hunt brothers briefly cornered the market.
Silver, a favorite of many small investors, has surged 49% year to date, easily outperforming gold's 6% gain. Sheer momentum could keep that spectacular rally going.
"Silver hitting $50 an ounce is just becoming a self-fulfilling prophecy," Zeman said.