Investor nerves apparent as gold strikes record levels

A MAJOR sign investors remain nervous came yesterday with news that gold struck record levels.

When the price of gold rises this is a signal investors are rushing to purchase it in a flight to safety as in times of crisis gold is seen as a secure investment.

The price of gold struck a record high above $1,700 an ounce while silver also moved higher yesterday in what was another troublesome day on the markets. Gold has gained more than 20% so far this year.

Dominic Schnider, executive director for wealth management research at UBS, said gold may even be headed to $2,000 an ounce.

One Tokyo-based trader said people are taking their money out of other markets, especially from the dollar and euro and investing in gold and the Japanese yen.

Executive director of Dublin-based Goldcore, Mark O’Byrne, said: “Gold’s value is as a safe haven asset that cannot go bankrupt, as financial insurance and as a store of value. Many today know the price of everything and the value of nothing. This is especially the case with gold.

“Those with little or no knowledge of financial, economic and, most importantly, monetary history continue to warn that gold is or may be a bubble.

“They should be urging diversification but do not understand diversification or gold. They focus exclusively on the nominal dollar price and fail to consider the price in euro and other fiat currencies.”

Also yesterday oil was hit, falling more than 4%, while industrial metals and agricultural commodities piled up losses.

“In the short term investors will be very careful,” said Pau Morilla-Giner, head of commodities and senior portfolio manager at London & Capital.

“You’re going to see a very high correlation with risk assets because there’s still a perception commodities are cyclical and the only area that will perform differently is the gold space.”

US oil is down around 7% compared with a rise of 15% last year, while Brent has gained 13% against an increase of 22% last year.

Yesterday too, fears about a global slowdown also hit industrial metals as copper fell to a five-week low.

Tin slumped as much as 8% to $22,400 a tonne, its weakest since last September.

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