by Mark O’Byrne, Gold Core:
Slowing economic growth globally has led for some rough days on Wall Street lately.
The Dow Jones industrial average and the Standard & Poor’s 500 index are both down by 6 percent so far this year. It’s sometimes hard to figure out where to park one’s money during an economic downturn.
Still, analysts have a few ideas on how to capitalize on the slump – or at the very least minimize losses or stash away capital until markets begin to recover.
Gold, treasuries and other bonds tend to be so-called haven investments, where investors often park their cash until equities recover. Like clockwork, investors have been dumping money into gold and treasuries since the start of the year.
Gold futures have jumped since the end of last year as money managers flee equities. The rate on 10-year Treasury bonds has declined by almost a fourth as people rush to invest in the low-yield, low-risk investment. Dumping money into both is a trend that’s expected to continue.
The biggest beneficiary of the slowing growth thus far has been gold, a popular haven investment as futures have jumped 14 percent this year.
“The backdrop of robust global demand and increasing financial and economic uncertainty is supportive of gold,” says Mark O’Byrne, the research director at GoldCore. “Janet Yellen’s comments … regarding not cutting interest rates anytime soon were quite dovish and led to gold’s gains. The fact that she reiterated the Fed expects to raise rates at a gradual pace and yet gold continued to rise … is quite bullish.”
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