TROUBLE TRIGGERS GOLD RALLIES
Gold has surged almost 15 percent year-to-date, rising every month except June, as investors flock to the safety of the precious metal.
The jump in price is, in part, a result of uncertainty and anxiety, analogous to other gold rallies of recent years. As gold topped $1,300-an-ounce during the final week of August, the devastating impact of Hurricane Harvey upon Texas became clear; it will be one of the costliest natural disasters in U.S. history. Meanwhile, North Korea’s threatening missile launches and its continuing war of words with the U.S. continue to trigger a flight to gold.
Gold’s last explosive rally occurred in 2016, leading up to and immediately after Great Britain’s “Brexit” vote to leave the European Union, which saw the precious metal climb more than $200 the ounce.
In 2010, the European debt crisis exacerbated global worries in the aftermath of the financial crisis, igniting a rally that took gold futures above $1,400 by year’s end. Investors feared another wave of recessionary conditions as governments including Greece, Spain and Portugal imposed strict austerity measures to cut their deficits.
During the dark days of the financial crisis, spot prices soared as stocks were in free-fall, jumping by nearly $90 in a one-day record gain that September.
Geopolitical concerns also fueled a gold rally in early 2003, as investors focused on safe-haven assets in the lead-up to the war in Iraq.
As these volatile periods have continued through history, gold remains a reliable investment. This year’s gold rally echoes factors of the past, and investors are now bracing themselves for the Congressional battle to raise the federal debt ceiling to avoid a government shutdown. Now, as ever, savvy investors are seeking tangible and safer assets, like gold, as a hedge against the uncertainty of today’s world.
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