Investors have been thrown for a loop in recent weeks as the market displays some unusual behavior. The price of gold has shot up just over 8% between the first week of October and the start of the new year. At the same time, the S&P 500 has dipped 14%. Investors who have increased their holdings in the precious metal have done better on their investments than those buying into other kinds of stocks during the same time period.
The gold mining company, Newmont (NEM), has seen its S&P stock rise by just over 14% since early October. Another similar gold mining company with stock in the S&P 500, Barrick Gold (ABX), has enjoyed a better than 13% increase in the value of their stock in the same time period. Last year, Barrick Gold merged with Randgold to form the largest gold mining company in the world. Their collective gains are just under 20%.
So, the question is, why is gold doing so well when the stock market as a whole is steadily declining? The answer, according to market analysts at Finance Clap, is a strange one because the state of the stock market is rather unusual. When it comes to the question of gold, it’s a simple historical fact that gold is the only currency that has never fallen to zero. One could include all precious metals precious metals in that category, but for the moment, gold is the hot topic.
Because gold is always worth something, smart investors always look on it with favor. But gold stocks are doing even better than expected. Even in the worst case scenario, when even gold isn’t doing well, hoarding gold is like saving canned beans for a coming famine. They may not taste amazing- but it’s something rather than nothing- and gold is never worthless.
But gold prices are still improving. That’s because the stock market still has some steam left in it. We all know that speculators have been predicting a hard crash for the entire stock market very soon. That’s because stocks have been steadily growing since 2011 and the historical time period for growth has nearly expired. But the market isn’t petering out like so many are expecting.
According to Samantha Azzarello, a JPMorgan global market strategist, “Just because we’re late in the cycle does not necessarily mean the end has arrived. The fact is, this ‘late stage’ could turn out to be quite long and unusually drawn out, much like the broader cycle. Calling it the end would be a mistake and could result in missed opportunities.”
Read Next
