Add One Billion and Stir Briskly

What is the recipe that many investors are utilizing to shore up their financial portfolio? – Add $1 billion and stir briskly.

According to Bloomberg Markets, last week investors poured 1 billion into the largest exchange traded fund backed by bullion, the most since mid-2006.

This article penned by Luzi-Ann Javier and Eddie Van der Walt spoke about the sum of all fears as a primary underlying factor fueling the current gold rally. The “Sum of All Fears” has restored investors’ faith in gold.

According to Ross Norman, the chief executive officer of London-based precious metals dealer Sharps Pixley Ltd, “If gold is really ‘the sum of all fears,’ then the gold price is saying that not all is rosy in the garden. Gold seems to have momentum behind it, too.”

Current investment levels in gold backed ETFs are swelling as investors and traders are accumulating large positions. Looking at assets in gold backed ETFs, tracked by Bloomberg, this is the biggest three-day gain since February.

Add to that hedge fund accumulation, which have increased their net long positions in bullion futures by almost nine-fold since early July. Collectively, large institutional traders and individual investors are together accumulating larger and larger positions in gold assets types.

Across the board, investors are reacting to a market scenario ripe with uncertainty. Concerns over the US economy has decreased the likelihood that the Federal Reserve will raise interest rates soon.

The current crisis stemming from North Korea’s desire to advance its nuclear weapons program, coupled with threats displaying intent to use them has been a prevalent factor on global investors. South Korean President Moon Jae-in warned Wednesday of an “uncontrollable situation” that could emerge unless North Korea’s provocations are stopped now.

The sum of these events have certainly ratcheted up the uncertainty factor, and the net result has been a massive flow of investment dollars into gold investments of all types.

Wishing you as always, good trading,