Gold vs. Stocks: Gold is Winning

Investor fears appear to be on the rise this week, as gold prices shot up 2.4 percent, unabated by a stronger US dollar.
Stock markets fell as the yellow metal rose, with geopolitical fears driving safe haven demand. The Toronto Stock Exchange was down 205 points to 14,035 during Friday trading hours, while the New York Stock Exchange was down as much as 162.25 points to 10,427.57. The Dow, TSXV, S&P 500, and NASDAQ were also in the red at the end of the week.
“As far as the geopolitical element, it’s certainly not a chicken little atmosphere,” Jim Steel, chief commodities analyst at HSBC told CNBC. “I think there’s enough uncertainty facing the global economy and even some geopolitical tensions to keep buying the gold market.”
Indeed, larger investors are heading for gold. The Wall Street Journal reported on Thursday that billionaire George Soros has sold off stocks and invested in gold and gold miners instead. Along with worries over the Brexit vote, Soros is concerned about the state of China’s economy.
“China continues to suffer from capital flight and has been depleting its foreign currency reserves while other Asian countries have been accumulating foreign currency,” he told the Journal via email. “China is facing internal conflict within its political leadership, and over the coming year this will complicate its ability to deal with financial issues.”
Meanwhile, Commerzbank pointed out in a note to clients that gold ETF’s tracked by Bloomberg have seen their eighth straight day of inflows, and are now at their highest level since November 2013.
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Securities Disclosure: I, Teresa Matich, hold no direct investment interest in any company mentioned in this article.