What are the investors turning to when they can’t buy shares anymore? Well, to gold and to raw materials – because these assets are counter-cyclical.
And of course, now its the moment when can sell futures on the gold price – if you think it is going down, or to buy – if you think that the investing crisis will continue for a while.
Reuters mentioned today that “Sales of gold by European central banks are likely to be lower than expected over the next year as the global banking crisis boosts bullion’s appeal as a “safe” reserve asset.”. Of course, as a central bank you need to hold some assets which have some real value since they are on crisis for quite a long while.
Another interesting twist of the current shares crisis is that the confidence in shares has decreased constantly since 2000, whilst the gold prices have increased (see the below charts):
(Courtesy of Yahoo Finance)
Gold evolution 2000-2008:
(courtesy of kitco.com)
Of course, this shows that the investors find a refuge into the gold prices when the markets go rough. And of course, if shares rise again, gold will decrease, provided that its global consumption will remain constant (which is not, since the world population becomes richer and richer overall).
So you might consider retiring safely into the gold havens these days. Or maybe investing in some gold companies for a while, if you (as recenzia.ro) are finally a shares fan.