Smart money is hedging with gold

Seeking Alpha/Clif Droke/7-8-2020

graphic image of 'perfect choice' badge-ribbon“The U.S. equity market has largely (if not completely) discounted the economic damage inflicted by the virus-related lockdowns, with a new bull market arguably underway. Yet gold remains in a steady upward trend, which seemingly contradicts the optimism that investors feel toward stocks right now. … Gold has done more than hold its value during the extremely turbulent year to date; it has also appreciated in value even as the equity market has risen 40% from the March crash low. Many observers wonder how gold, which historically moves inversely to stock prices, could trend in sync with the equity broad market. That question can be answered by considering that the primary function of the yellow metal is to serve as a hedge against fear of the unknown, and the more uncertainty there, the more likely gold prices will rise (even if the stock market and the economy seem to be stable).”

USAGOLD note:  We referenced Clif Droke’s latest gold market analysis in Friday’s DMR and repost it here for those who may have missed it. Smart money has been flowing in gold’s direction for a while now and that trend appears to be picking up momentum as reflected in the persistent demand reported globally for both gold ETFs and physical gold coins and bullion.

Image courtesy of Visual Capitalist

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