Buy Gold and Head for the Bunker?
New York (Aug 19) It has been a rough week, between a terrorist attack in Spain and inflamed racial tensions in America stemming from the deadly Charlottesville protest, the U.S. and international markets have not fared too well. Investors are adjusting their portfolios, creating an exodus from the equities market as they look toward notable safe havens, such as gold. But, depending on investors' views regarding geopolitical concerns, it may not be the right time to stock up on gold.
August and September are "notorious" for selloffs in the market, said TheStreet's founder and Action Alerts PLUS portfolio manager Jim Cramer on CNBC's Mad Money. On Thursday, the CBOE Volatility Index (VIX.X) closed up 25% as the Dow tumbled 274 points, marking the biggest drop in three months. The Dow continued its decline on Friday while the S&P 500 hit its lowest level on Friday since July 11 and the Nasdaq was on pace for its fourth consecutive weekly decline -- that is until news that White House Chief Strategist Steve Bannon was out.
Gold prices, meanwhile, jumped Friday morning to $1,305.40 per ounce, hitting what TheStreet contributor and President of Sarge986, Stephen Guilfoyle, called the "giddy-up spot." Gold ended up finishing slightly lower at nearly $1,300 per ounce.
"Dependent upon dollar valuations, this is where I believe that if taken and held, we will see an acceleration to the upside for the yellow metal," Guilfoyle wrote.
Gold, which is often called the "crisis commodity" and serves as a hedge against geopolitical chaos, is a largely reliable investment over the longer-term and generally outperforms other investments as world tensions rise. Kirkland Lake Gold (KL) CEO Tony Makuch said on Wednesday that gold prices should be higher given the heightened tensions regarding nuclear war with North Korea.
"Yeah, I think it should be higher, it could be higher," Makuch said on CNBC's Mad Money. "And that's why we put our investment in gold. We think gold is the right thing to be not only producing, but it's also the right thing to be investing ourselves in."
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