The case for gold

Seeking Alpha/Michael Gayed

photo of pile of Swiss 20 franc gold coins

“[C]ontrary to popular belief, gold tends not to correlate with most other asset classes. If you’ll indulge me, in allegorical terms, I look at gold as this anti-social, misanthropic bloke who packs his bags and goes on a lone hiking trip away in the hills, when all the other asset classes are dashing in or dashing out of the small town’s local carnival fest. In other words, gold just tends to do its own thing, and thus is perceived to be a diversifier in that sense. What gold is rather adept at dealing with is heightened stock-market volatility and the associated stress in the markets. ……”

“We may see volatility trend higher as we inch closer to the US presidential elections, and both sides go at it hammer and tong. The markets will attempt to get a whiff of the economy’s future direction based on various comments made by the two contestants. Still, it’s unlikely to be smooth sailing as big-bang policy statements will likely be made, only to be potentially dialed down or contradicted later. All in all, these elections may likely add their bit to the volatility cauldron.”

USAGOLD note:  An interesting analogy and some applied common sense, in this article, on the kind of market volatility that usually accompanies presidential elections. “Gold,” says Gayed, “may not be the flavor of the month at the moment, but given some of the conditions I’ve highlighted above, I think investors should be considering bringing some yellow metal into their portfolios.”

Repost from 10-13-2020

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