Physical Gold Prices’ Sharp Rise During Stock Market Volatility Proves Safe-Haven Value
Posted By | November 2, 2018
Despite a recent flurry of volatility, the stock market has managed to continue its record bull run. In some ways this makes the situation even more concerning, and the list of experts predicting a major correction, even a full-blown bear collapse, continues to grow. Commonly cited reasons to expect a significant downturn are plentiful and include the return of higher interest rates, worsening trade climate, and uncertain U.S. political environment.
Even as these warnings become more numerous, the stock market marches forward. Part of the reason is that regular investors not only remain in stocks but actually keep buying even while professional asset managers have started leaving equities in anticipation of big trouble. Consumer investors apparently believe the much-called-for collapse is just another false alarm.
The jury is still out as to whether the current volatility is leading directly to a bear market as some analysts now suggest. This makes it a good time to evaluate how alternative assets such as physical gold fared during the stock market’s most recent upheaval. It’s understandably easy to get sidetracked watching and worrying about the stock market’s next move, but it’s probably a better use of your time to examine those assets predisposed to moving up in volatile climates to see if, in fact, they’ve managed to offer any relief recently.
Gold Rises as Stocks Fall in Market Turbulence
A look at gold, for example, reveals the metal not only stood up well during the highly volatile first two days of the most recent round of carnage, but gained roughly the same amount as equities lost in the ensuing two weeks. The chart below speaks volumes – it reflects the performance of both the Dow Jones Industrial Average and gold from October 10-11. During these first two days of the stock market volatility, the Dow suddenly lost more than 5% of its value, closing down a whopping 1,377 points.
Performance of Dow Jones Industrial Average vs. Gold – October 10-11, 2018
(Chart Courtesy of StockCharts.com)
After the first two weeks of the recent stock market volatility, gold rose 4.25% while the Dow was still languishing at 4.7% down from where it began the morning of October 10.
Investors hate to see their prized equities drop so quickly, but it is good to see select alternative assets that live outside of paper asset markets, such as gold, respond very favorably when stocks are in the middle of cardiac arrest. That kind of movement validates the wisdom of keeping physical metals in a portfolio as a way to keep your financial house from collapsing when the economic earth violently begins shaking.
Witnessing gold moving this way against equities also validates the data that says gold is almost entirely uncorrelated with stocks. The lower the correlation between portfolio assets, the greater the chance you can achieve the effective diversification so important to a high-functioning portfolio.
Gold IRA Can Help Insulate Your Portfolio from Stock Market Upheaval
Where does the market go from here? The real answer is that it doesn’t matter. That is, it doesn’t matter as long as you have seen fit to configure your portfolio so it remains resilient during a major downfall. And, as the last couple of weeks have illustrated, gold certainly has the potential to exert that kind of influence on behalf of your savings.
Is your portfolio ready for the day the bull finally dies? Not unless it is effectively diversified with assets proven to be uncorrelated with stocks, such as physical gold.
If you don’t presently have gold as a part of your savings or retirement plan, call Augusta Precious Metals at 855-242-4121 and speak with one of our knowledgeable gold and silver specialists. If you do have gold in your portfolio already but are uncertain if it’s enough, you also should call Augusta. While you’re at it, ask the Augusta representative for information about how you can buy your gold and silver inside of an IRA. A gold IRA (or silver) from Augusta Precious Metals may be just the piece you’re missing that allows you to finally solve your personal retirement puzzle.
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