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Money Gold on record drive - should this be why equity investors worry?

05:15  11 august  2020
05:15  11 august  2020 Source:   finanzen.net

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Why Gold Has Always Had Value. What Drives The Price Of Gold ? During times of economic uncertainty, as seen during times of economic recession, more people turn to investing in gold because of its enduring Gold is often considered a "safe haven" for investors during turbulent times.

Some investors are getting increasingly worried about the outlook for technology and big growth stocks after a massive rally which has pushed the Instead, investors say the popularity of tech and growth stocks at a time of global economic uncertainty has left their valuations stretched and primed

Gold and stock prices usually go in different directions. But during the Corona crisis, things are going up steeply for both. What does this mean for equity investors?

DANIEL ROLAND/AFP/Getty Images © Provided by Finanz.net GmbH DANIEL ROLAND / AFP / Getty Images

• Rally in gold and stocks at the same time is rare

• Corona aid measures support both

• Dollar weakness also helps

Gold enjoys the reputation of being a "safer Port "to be. In uncertain times, therefore, many investors usually part with their stocks and park their money in gold investments. For the security that is promised, they accept that they will not receive any interest or dividends for doing this. This is why the yellow precious metal typically has a negative correlation to stocks: when stock prices fall, gold becomes more expensive and vice versa.

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The price of gold is driven by multiple factors that work together in counterintuitive ways. The problem for central banks is that this is precisely when the other investors out there aren't that The total number of gold ounces one holds should fluctuate with the price. If, for example, one wants 2

Why Are FedEx Shares Soaring? At right, we see the continued progress since December, Gold 's having raced right up through the 1800s and 1900s, with closes above 2000 now for four days. ■ Therefore, (drum-roll please): we shall stay the course* of these weekly missives until such time Gold

rally in gold and stocks

But the Corona crisis turns this common truth on its head. The US leading index Dow Jones as well as the S & P500 , which reflects the broad US stock market, have both risen by over 40 percent since their corona-related lows reached on March 23.

But at the same time the gold price climbed by around 30 percent. Barely nine years after the last all-time high, it has passed the $ 2,000 mark and hit new record highs. That makes many investors very nervous. Due to the record drop in US economic output in the second quarter of 32.9 percent (annualized), they are already wondering whether stocks are currently overpriced. The rally in the gold price only adds to this concern.

Rare Phenomenon

But Ryan Detrick, chief investment strategist at the independent broker-dealer LPL Financial, appeased in a blog post: "It is widely believed that a strength in gold is likely to indicate that something is wrong in the market and that investors are more defensive but it may not be that simple. "

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Why do investors buy gold ? In times of a crisis, investors globally view gold as a safe haven just the way they treat US government How much money is invested in gold ETFs? Edelweiss Securities says easy money flows are driving global equities along with other asset classes, particularly gold .

Why Gold Has Always Had Value. What Drives The Price Of Gold ? They believe that investors have as many reasons for investing in gold as they do vehicles to make those investments. Gold can stimulate a subjective personal experience, but gold can also be objectified if it's adopted as a

he continues: "2020 is the first year since 1979 in which both gold and the S & P500 reached new highs in the same calendar year. What happened after that? Gold climbed 17 percent in 1980 and the S & P500 by 26 percent."

The fact that both gold and stocks are currently rising strongly is rare, but does not necessarily mean that the future outlook for stocks is bleak. Rather, both asset classes could continue to improve.

Recently, a weak dollar had also boosted demand. Because gold is traded in dollars on the world market, a weak US currency makes the precious metal cheaper in countries outside the dollar area.

Corona measures support gold and shares

In order to mitigate the economic effects of the corona crisis, the international central banks and governments have decided on stimulus measures worth billions. But the relaxed monetary policy and the aid packages are also fueling investors' concerns about inflation, from which gold can benefit, as it is traditionally used as protection against inflation.

Fund Manager Survey: Professional Investors Switch to Bull Mode

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All Instrument Types. Indices. Equities . ETFs. This worries me a lot. Rapidly increasing business inventories is a major sign that consumer spending isn’t growing. Please do not invest with money you cannot afford to lose. Original post. Why Last Month’s Employment Numbers Should Worry

“ Why this is interesting is because this is very much a much more broad-based index than just looking at the S&P,” said Newton. Both indices saw a bull market Dow Theory, one of the oldest ones in technical analysis, holds that transportation and utility stocks should confirm rallies in industrial shares.

Among other things, the Fed has lowered its key rate to close to zero percent and has signaled that it will stay there for a long time. The loose monetary policy of the monetary authorities and the increased borrowing of the government, however, led to a noticeable decline in yields on government bonds.

Both gold and stocks can benefit from this environment. On the one hand, investors who value returns have fewer and fewer alternatives. Investors for whom the yields on government bonds have become too low could switch to equity investments, even though these are more risky than bonds.

On the other hand, the interest in gold is growing, because due to the low yield on bonds, the major disadvantage of the yellow precious metal - its interest-free status - hardly plays a role in comparison to government bonds.

Weak dollar helps both

In addition, investor confidence in the US economy is declining as a result of the escalating US budget deficit. This weighs on the dollar. For example, the

dollar index, which reflects the exchange rate in relation to major currencies, was last at a two-year low .

This dollar weakness, however, strengthens the demand for gold, after all the precious metal is traded in dollars on the world market. A weak greenback therefore makes gold cheaper for investors outside the dollar area. But stocks of export-oriented companies can also benefit from a weak local currency, after all, their products are cheaper for customers in other currency areas.Redaktion finanzen.net

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Jan Du Plessis and Philip Jansen, both of whom have form for selling great companies to the highest bidder, should not be allowed to defenestrate BT. The idea of Britain's national telecoms company hiding behind closed doors in private equity ownership ought to be anathema. Anything that private equity can do, such as spinning out Openreach and selling the serially disappointing global networks, could be done in the public arena. If the UK is to shine in the post-Covid, Brexit world it must have ultra-fast broadband as in South Korea and Spain. The late-2020s is too late.

usr: 1
This is interesting!