Gold Holds Up Against Market Turmoil
The Dow Jones closed down over 300 points on Friday, due to a heavy sell off on the realization that US job growth is only evident in government hiring. Unfortunately, government hiring doesn't contribute to economic growth, and instead crowds out private industry.
Investors looking for shelter found few safe places, but a notable one was gold. Gold was up $12 on Friday, while every Dow stock was down. Gold continues to hover around $1200, proving its stability and frustrating buyers waiting for it to fall back to $1000. It may never happen.
Some proponents of precious metals have argued that mining stocks and other resource equities are an equivalent to gold, however Friday's trading action has once again shown that assumption is false. While mining stocks may prove to be a great investment over the long run, there is no replacement for physical gold. GDX, the Market Vectors Gold Miners ETF was down 2% on Friday and offered no protection.
Silver was also dragged down with industrial metals, and the gold to silver ratio has once again topped 70. In recent months the gold to silver ratio has oscillated between 60 and 70, so it may be a good opportunity to trade gold for silver.