Few investments are driven by psychology and fear as much as gold.
Concerns about ruinous inflation, global tensions or economic
instability can send investors out of stocks and right into the
seemingly safe harbor of gold.
Is the fear trade back on? A double-digit rebound in gold prices
since the year began has led some investors to wonder if gold is poised
for a great 2014 after a dismal slump in 2013 when gold prices fell more
than $400 an ounce. Junior gold miners have fared even better: The
Market Vectors Junior Gold Miner ETF (NYSE: GDXJ) is up roughly 35% in the past three months.
Much of the impetus for an upward move in gold prices was the
building tensions in Ukraine, which led to concerns about potential
military escalation. It's now apparent that financial sanctions, and not
a deepening of a war posture, will characterize the hardening
Russia/European Union relationship, and the risk factor is slowly
receding.
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