Gold Two Steps Forward ... One Step Back

Gold Two Steps Forward ... One Step Back

• 'Death of gold' greatly exaggerated

• Vital context: gold rose sharply in years preceding crisis and during crisis

• Important to consider gold in local currency terms

• In euro, gold is up 2% in 2015, after 13% gain in 2014

• Gold at €300 in 2001, rose to €1,400 during crisis and at €1,000 today

• History, academic and independent research shows gold is a safe haven

• Sharp fall in value of commodities means global economy is weakening

The deluge of negative publicity regarding gold in recent weeks would give one the impression that it was now worthless and serves no function in a portfolio. We believe this publicity is greatly exaggerated and will be seen as folly in the coming months.

In the years running up to the financial crisis of 2008 gold rose dramatically despite the warning signs being widely ignored. It continued to act as a reliable store of value as the crisis deepened and then began to fall back following the stability – temporary, we believe – provided by central banks creating more debt to deal with a crisis of over-indebtedness.

History, academic research and independent research show unequivocally that gold acts as a safe haven. As GoldCore’s research director Mark O’Byrne pointed out on RTE Radio 1’s Morning Ireland this morning gold has an inverse relationship to other financial instruments.

“It’s interesting because the fall in value of all commodities and oil prices suggests that the global economy is much, much weaker than people actually think and that should give pause for concern in terms of the outlook in the coming months.”

ENDS

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