Why I am Watching Gold

cryptomeeks(53)

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Disclaimer:

The information in this article is meant only as educational content, expressed opinion, and not investment advice. Investing your money in openly traded companies is risky and can result in the loss of principle. Investing in commodities is more risky than trading company stock as commodities are open to more risk since they are traded on the global market. This means that the ETFs of the underlying commodities (GLD and SLV) are at risk to having big movements in price while the US markets are closed. Only invest what you can afford to lose, and always do your own research.

This past week we saw the US stock market take a hit. Many investors are questioning if the shakiness in the market is a signal of a big shift taking place.

When a big sell off takes place in the markets, it is common to see a fall in asset prices and a rally in the well known dollar index, DXY. Instead we saw a breakout in the gold price.

If you follow the commodities markets, and especially the precious metals markets, you know that there are fakeouts that occur. Is this a fakeout? Or is it the start of a shift from traditional investments, and into gold as a safe haven asset.

I'll explain more in another article, but my opinion is that gold is not seen as a safety play right now, but rather as an inflation hedge. Gold has been deflating since 2011, and has looked weak technically since then.

However, if the gold price can maintain momentum, I see it as a nice short-term play as the stock market experiences some volatility.

The trend has yet to establish itself, but it is something to keep an eye on.

I am currently not opening any positions.