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Closing Gold & Silver Market Report – 10/17/2011

GOLD AS A FOURTH ASSET HELPS PROTECT AGAINST BLACK SWANS

Precious metals have recovered slightly against mid-day numbers as the stock market selloff gathers steam but held back as the dollar grew stronger on news out of Europe.  Many investors are still bullish on gold as a fourth asset class due to its inverse relationship with the stock market as well as currency values.  It does well to help balance out an investor’s portfolio so as to protect against “black swan” events and market declines.

While some look at the selloff in gold as a negative thing, hedge fund managers and long-term investors recognize that when gold goes down it usually means positive things for the other components in a well-balanced portfolio.  This is what makes it such a great asset class to hold onto during troubling times.  David Kudla, the Chief Investment Strategist at Mainstay Capital Management, comments on the protection of gold, “It’s a defensive hedge…People buy gold to hedge against inflation, against deflation, against economic or political uncertainty.  We have all of those concerns -- and real concerns about the debasing of currencies worldwide right now.”  Tony Roth, Head of Wealth Management Strategies at UBS, adds that he feels investors should hold anywhere from 5% to 20% of their portfolios in gold for “downside protection.”

James Moore, Research Analyst at FastMarkets.com, shares an ideal situation where gold is serving its investors well as a hedge, “Inflation remains stubbornly high in India, over 9% for the 10th month in a row…and this is leading to continuing store of wealth demand from Indian buyers.”

At 4:00 PM (CT) the APMEX precious metal prices were:

  • Gold price - $1,674.10 – Down $10.90.
  • Silver price - $31.83 – Down $0.38.
  • Platinum price - $1,553.80 – Down $1.10
  • Palladium price - $619.50 – Down $3.00

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Disclaimer:
APMEX Market Reports provide our readers with a review of spot price activity and some of the factors that may be affecting the market for Precious Metals. While the information is obtained from sources we believe to be reliable, we do not guarantee its accuracy or its completeness and we encourage you to conduct your own investigation prior to making any decision based on the information. The Market Reports are not intended as a comprehensive discussion and there may be other factors affecting the financial marketplace. These Market Reports are provided for informational purposes only and do not constitute a recommendation by APMEX to hold, purchase or sell any Precious Metal product. All orders, purchases and sales, if any, are subject to the terms of the User Agreement and other applicable policies.

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