Gold’s Value as a Safe Haven Intensifies

Thursday, 17 July 2014
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Published in Gold Investing
For the second straight day, Gold has repeated last week’s pattern of defying its own customary summer trading doldrums. After a precipitous sell-off that knocked the yellow metal down to $1,298, it closed Thursday at $1,320 per ounce, up $19.00 from the previous day’s close. Additional sanctions on Russia, coupled with Israel’s just announced invasion of Gaza, have led investors to turn to gold as a safe haven. An out-of-control Dow at high prices has proved a spinning merry-go-round, much too difficult to mount for the unsure investor now looking for stability and safety.

Positive-Pullback

Despite its assertive movement right now, gold has not surged to the upside with a fury. A Reuters report this morning sagely points out that if hiring and wage numbers improve, the Fed could authorize a rate raise earlier than previously announced. Given such a raise, some investors could cash in their gold in favor of moving into interest-bearing accounts.

Still, prices are holding well above the $1,303 100-day moving day average. Also, Moscow’s inability to limit violence in the Ukraine, and the latter country’s tagging of a downed Malaysian airliner with 279 passengers as “an act of terrorism,” supports investors’ current need for a safe haven.

If you’re presently contemplating an investment in gold, you might want to pay more attention to the fundamentals than to the technical indicators. As I write, Israel just began its invasion of Gaza. It announced this move at 10:39 Israeli time. This invasion could cause a surge in the price. Such a conflict asserts a tug on many nations — the US, Russia, France, Britain and others — and economies could get out of control.

If you’re concerned about another sell off or test of the $1,298 level, dollar cost average your gold purchase — buy some at the current price, and the remainder if we do test that level. When gold surges towards the end of the year, you won’t sweat the $22 per ounce difference in your two purchases.

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Trevor Gerszt

Trevor Gerszt has been passionate about gold since childhood. Growing up in South Africa, the world’s second largest gold producer, Gerszt spent his youth collecting gold coins. Surrounded by a family of experienced coin collectors, he gained valuable insight about the precious metal.