Public Service Announcement: Gold is Now the Risk Trade, Not the Safe Haven

“A camel sneezed in Dubai and the immediate reaction was a flight…TO THE US DOLLAR

– TRB

I am not making a directional call on gold here or offering any kind of advice, but I am going to disabuse many who read this of a very foolish notion:

Gold is no longer any kind of “Safe Haven”.  Those days ended when the 38th gold ETF came public and the 900th commercial for gold coins ran on Fox News during the Glenn Beck Paranoid Lunatics Anonymous Hour.

Don’t get it twisted – gold is now the quintessential risk trade, moving in tandem with risk appetites and the pursuit of momentum by investors around the world.

Don’t believe me?  How about this…during Thanksgiving week, when half of the country’s traders were away from their screens, you got your proof:

A camel sneezed in Dubai and the immediate reaction was a flight – TO THE US DOLLAR.  Gold was smacked down immediately, albeit briefly, as the HOT MONEY came flying out of it right alongside crude oil, tech stocks and junk bonds.

For that brief moment when the financial world teetered on the edge of a possible panic, the only green on the screen was in the greenback.  When there was real fear, the first reaction was to flee the precious metals, not to buy them, as would be consistent with an asset class that was truly a safe haven.

You want to “play gold” or pat yourself on the back for owning hard assets, be my guest, it certainly is working right now.  That said, don’t tell me with a straight face that you’re in it “for the safety”.

We learned the other day just how disingenuous that statement truly is.

Full Disclosure:  Nothing on this site should ever be construed as research, advice or an invitation to buy or sell any securities, please see my Terms & Conditions page for a full disclaimer.

What's been said:

Discussions found on the web
  1. RJ commented on Dec 02

    What will be the safe haven if the U.S. is the target of a terrorist attack?

    TRB: go to nebraska in that case. its where they stashed George W on 9/11

  2. RJ commented on Dec 02

    What will be the safe haven if the U.S. is the target of a terrorist attack?

    TRB: go to nebraska in that case. its where they stashed George W on 9/11

  3. OS commented on Dec 03

    The rise of the dollar during the Dubai shock could be caused by an unwind of dollar carry trades ;).

    However I agree that gold is not a safe haven, nor an investment. Buying gold is nowadays highly speculative.

  4. OS commented on Dec 03

    The rise of the dollar during the Dubai shock could be caused by an unwind of dollar carry trades ;).

    However I agree that gold is not a safe haven, nor an investment. Buying gold is nowadays highly speculative.