The Glistening Project: Why Some Investors Are Looking Again At Gold

The comments below are an edited and abridged synopsis of an article by Steve Land

The return of volatility to global financial markets in October has prompted a resurgence of interest in gold after a quiet summer.

The Glistening Project: Why Some Investors Are Looking Again at Gold | BullionBuzz

Gold declined for 6 months through September, the longest consecutive monthly downtrend since 1997. After spending much of September and early October in a narrow trading range, the gold price picked up following the equity market wobble in mid-October.

There are some interesting potential catalysts for gold in the current market environment. Gold plays many roles: as jewelry, as a financial asset, and in applications in the medical and dentistry fields. It even has industrial uses in high-end electronics.

Jewelry demand remained solid with a 6% year-on-year growth rate during the third quarter of 2018, with a strong global economic backdrop and 10% improvement from China and India lending support.

Improving economic activity and positive wealth generation (aided by positive global stock market performance) should offer broadening support for jewelry sales as that market remains the largest segment of demand for gold

Gold’s role as a financial instrument is mainly as a diversification tool given the precious metal’s history of low correlation with other financial assets and its long history as a store of value.

Interest in gold as a financial asset has declined the past 2 years as strong stock market returns with limited volatility provided little reason for most investors to look for diversification, but there are signs for the asset is growing, notably among central banks.

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