This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

4 Reasons Gold Remains a Safe Haven

NEW YORK ( TheStreet ) -- Gold is still a safe haven for investors, it's just taking on a new look that some may find uncomfortable -- volatility.

Gold prices have had a turbulent summer -- rallying more than $350 in 4 months to then fall 11% from their intraday high of $1,917 an ounce in two days. Many investors buy gold as a safety net, but with prices seeing daily double digit swings is gold still safe?

"Gold isn't the perfect safe haven but it's the best one you are going to get," says Adrian Ash, head of research for BullionVault. According to Ash, the Swiss Franc and Yen are other popular safe havens but their associated countries don't want them to be. Both central banks have been trying to make their currencies less attractive to investors to improve their exporting power, tipping safe-have status back in gold's favor. .

Ash also says that the fact that gold rallied as the stock market tanked during the summer is the start of a new phase for the shiny metal. "Gold is attracting flows when investors leave other assets," whereas in the past any mass selling in stocks triggered selling in gold as investors had to cover losses.



Although pullbacks have been fast and furious, Ash argues that a $100 move is, percentage wise, not a big deal.

Alec Young, equity strategist at Standard & Poor's, says that gold prices just moved too far too fast and that increased volatility is a normal result. "Markets will go up at a 45% angle ...when something goes up in a straight line it's never really sustainable ... gold is still a safe haven ... but it doesn't mean it goes up every day."

Despite pullbacks, many experts believe that gold's role as a safe haven is intact and that prices will eventually trend higher because of these four secular trends.

1 of 5

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
IAU $11.65 1.75%
SGOL $117.88 1.76%
GLD $115.60 1.71%
WFC $53.94 -0.85%
AAPL $124.25 -0.14%

Markets

DOW 17,698.18 -77.94 -0.44%
S&P 500 2,059.69 -8.20 -0.40%
NASDAQ 4,880.2280 -20.6570 -0.42%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs