Gold News: Does gold work as a safe heaven?
Gold News
It has been a rough ride for gold investors in recent years and the last week wasn´t the exception when gold lost more than 1%. It was a week full of fear in the markets due to big falls at the Oil prices and other commodities. That was the main reason for the big falling in the US stock market, China’s stock market and the biggest markets of Europe.
Contrary to common sense, the gold didn´t work as safe value during the week. It went down like every asset but US dollar.
The US Fed is failing to normalize interest rates, which were the driving force of the markets during the last 7 years. The problem is that overseas economies were affected by a strong dollar and now are trapped. We are witnesses of a new currencies war between emerging markets, trying to regain competitiveness against a strong dollar.
In Addition, China, the second largest economy, is still showing bad economic data, which could still affecting more commodities prices and waking up the bears who were asleep for many years.
During 2016, we are seeing the biggest outflows from the most important ETFs (eg. SPY and QQQ), a sign that institutional investors are scared. A bear market seems to start because these investors tend to be more tactical, and thus outflows from these ETF stalwarts are a strong sign. But that could be good news for gold investors. The situation with GLD (most representative Gold ETF) is different because it has taken in more than $400 million dollars this year, a signal that gold is still being a safe heaven and could increase its price if the volatility at the stock markets continues.
