Gold rush leads to safe haven buying
Often clients say that they are staying out of the market and waiting for the right moment to get in.
Usually, this is precisely the right time to trade and diversify into other products. Just look at the currencies and the commodities, markets that would not usually attract your average financial spread trader, but they have moved and movement is a trader’s best friend.
It is no wonder that many clients have stayed away when you look at the performance of the Dow Jones this year, but other markets exist and move just as well.
Gold is a prime example. Seventeen-year highs have been recorded recently and Finspreads’ clients continue to remain in favour of the rush to buy this precious metal. Gold and other precious metals are considered a safe haven for investors during times of uncertainty and ever since America started to threaten Iraq with military action, the price of an ounce of gold has risen.
Compounding this rise has been a flood of money into metals which have been in such high demand over the last couple of years due to expansion in India and China.
Since the Iraq war the price of gold has rallied from $332 an ounce to $473 (that’s a total of 1410 points, as gold is quoted in tenths) and this year alone it has put on an extra 11 per cent (450 points/ticks).
So if you are still waiting for the right moment to enter the market, then you just haven’t been looking hard enough. Gold is one of the many popular markets that clients can trade with Finspreads and with the choice of either a rolling contract or quarterly contract you can take a short-term and long term view.
Will we see a return to the dizzy heights of 1987 — when gold was trading around the $498 level — or will the dollar rebound sufficiently to attract investors away from this precious metal back into the American currency?
Another reason for gold’s rally has been the demise of the dollar as investors have been attracted away from American assets and into the precious metal.
Well, there is a distinct possibility that if gold does hit $500 an ounce there will be some profit taking.
If you would like to learn more about financial spread betting and in particular trading, then come to Finspreads’ free seminar at the Novotel next Tuesday. For more information:
www.finspreads.com/education_seminars.asp;
tel: 020 7150 0500