The fact is gold isn’t becoming the safe haven investment that it used to be, this is a growing belief to experts and analysts. Instead of gold bullion, investors are protecting themselves with US Dollars. After a six-year low for gold, things are not getting better. The investing behaviour does not follow the common indicators of the past global crisis.
Barclays stated about this new and odd trend inside investment in times of crisis and panic. The gold price reached its higher peak at US$1895 per ounce back in 2011. According to Barclays, those privileged numbers will not come back any time soon. Despite all the critical economic problems occurring in Greece and China, investors are not acting like they used to.
The US strong economy is attracting even more investors than before. The recent FED’s reports didn’t reach the expectations, but they were good enough to give confidence to the markets. Their currency keeps its supremacy among similar and now we found it on top of bullion when a safe haven asset is needed.
Many experts were expecting that the ongoing crisis would be the needed boost for the gold prices. The investors fleeing from the EU – Greece situation didn’t look for gold or any other commodity. Either the ones who were running away the stock market crash in China. Almost everyone takes the US Dollar as the preferred option.
This sudden forgiveness about the gold commodity and its industry has hurt it in a relevant way. The gold sector market is also bearish. Many companies are having serious problems. The big ones are selling assets like production mines to pay debts and resists the bearish prices.
According to Barclays, the supply factor doesn’t have a clear resolution. Peru’s 2015 gold production raised about 8 percent year on year, demonstrating that there is not a clear point of view for the industry situation. Far away, South Africa’s production had fallen 8.3 percent. In the African country, mining companies are having hard times with syndicates and local government, who are fighting for a significant wage increase in times of bad gold prices.
As mentioned by in the media with frequency, India is helping to maintain the price where it is. The Indian Jewellery supply companies and similar industry are buying more gold every day, in the same pace that it falls. It supposes to be a common practice for the country, who buys tons of the precious metal when it suffers an important loss of value on the markets.
This bearish situation is only helping the US Dollars investors, who are seeing their asset become stronger every day that pass. The Federal Reserve’s decision in the next months can help the gold prices to go up, but with the severe crisis going on in the Asian superpower, it isn’t clear that where are going the indicators. China itself can make some important gold-related decision and these can be made soon due the deterioration of the domestic economy.
Some other factors are quite important, but it isn’t clear why the investors look away this time, ignoring complete the safe haven that the gold represented once. Many economic theorists are aiming in favour of the gold. They don’t believe in the promised stability of the fiat currencies now used as international reserves. But in the meantime, the United States Dollar is getting heavier than the rational gold value. China’s stance in the future is considered as the possible game changer for the gold in the next years. Many considers that a gold revaluation is going to happen real soon, all because the urgency created by the stock market crash.