All that glitters is gold
Even as stocks have taken a beating and experts expect this trend to continue, gold dust is in the air and everyone is smitten by it. Of late, gold has made a rip-roaring return in the books of buyers and this trend does not look like abating any time soon. At about $1,230 an ounce, prices are 5% higher than at any other given point in the past few weeks and it shows no signs of easing up at all. Why the sudden gold rush?
Curiously, gold has always been seen as the classic hedge in the face of inflation as it is a very tangible and very real asset as opposed to the value of paper currency. But keep in mind that several analysts are more focused on the possible fallouts of deflation as opposed to inflation and so the popularity of gold becomes all the more intriguing in the face of this. This is not to say that gold and inflation are tied hand in hand as it has been seen that gold prices often spike in the face of fear mongering and consequent purchases. And so it seems to be the case here too; as investors fret and fume and fear that the economy might not take off for some time yet, gold seems to be the beneficiary as prices move further north.
It is the exact opposite of the treatment that stocks are getting as of now and as uncertainty looms large gold is becoming increasingly popular among investors. It’s a question of a wave of momentum building behind it and a number of factors making potential alternatives such as stocks and currency an unattractive option. On the face of it, it seems counter-productive to think that gold prices are booming amid fears of deflation. In fact, investors are also painfully aware of the potential for inflation down the line and this fear could propel gold on still furthermore.
Gold is a resilient commodity and it is effectively acting as a fallback for everyone, a crisis fund of sorts, so it doesn’t matter whether you’re buying it for deflationary or inflationary reasons; the fact of the matter is it’s the safest bet of all. But it’s not all about economic considerations. A dream team of investors have put their money where their mouth is and revealed their investments in gold and while many will follow blindly, it makes more sense to follow your own path and not pick anything you deem risky. Investors like things that just work, and right now that seems to be gold. It has the Midas touch, if one were to put it humorously.
Gold is set in an upwardly motion right now but as it was the dot-com and the real-estate bubbles, this too could pop in your face before you know it. It is a trend, and it can be reversed just as well. Choose to place your bet wisely and make a choice on whether to hold or to go gold.
