Fears of a crash equivalent to the GFC in 2008 has led investors to consider moving funds out of the stock market and into gold backed assets.
The gold price fell in 2013, 2014 and 2015. However, at the start of 2016, investors were considering the advantages of putting at least some of their wealth into precious metals as a hedge against further stock market declines.
As reported on January 21, 2016 in Bloomberg gold news:
“The metal (gold) rose as much as 1.9 percent in New York as commodities dropped and a gauge of world equities teetered on the brink of a bear market. Citigroup Inc. raised its forecast for gold prices this year, while cutting the outlook for crude oil and base metals. The cost of living in the U.S. fell in December and housing starts unexpectedly slumped, government data Wednesday showed.
“We have a lot of fear today that’s gathering steam,” James Cordier, the founder of Optionsellers.com in Tampa, Florida, said in a telephone interview. “We definitely have some diversifying going on out of stocks and into fear trades, which is gold today. With the combination of a lack of inflation in the U.S. and the turmoil in the stock markets, there’s no other way to look at the Fed right now other than they’re on hold.”
Source: Bloomberg, Jan 21, 2016
The beginning of 2016 has been an uncertain time for investors and everyone is nervously waiting for the markets to show some signs of calming down.