In the wake of terror attacks in Germany and Turkey this week, gold trends and its derivatives have remained relatively unchanged and are still in decline. Usually the market reacts to uncertain times by abandoning stocks and investing heavily in precious metal commodities, like gold. However, investors are finding that the past cannot always predict the future. Investors from around the globe are continuing to accept the higher risk that comes with stocks in the hope of reaping even the smallest return.
Will the Market Return to Gold?
Terrorist attacks around the world have become more frequent in recent years and their horrors cause ripple effects. These occurrences shake the norm, causing a regular day to be impacted and normal events like trading to have a deeply emotional response. Fortunately, people and economies are resilient, and they quickly rebound from immediate dips following such attacks.
For centuries, gold has been considered precious and valuable. Although it is no longer a form of currency, it is still a means of holding and transferring wealth. Just like any investment, gold runs through cycles based on external factors like interest rates, currency rise and decline, and governmental regulations on commodities. With that being said, gold will continue to be a strong long-term investment even when markets are changing.
Holding Gold – The Strategy of Riding Out the Storm
Many financial advisors suggest that holding onto an investment that has severely devalued is the best strategy. Buying high and selling low should obviously be avoided, especially for an investment like gold that will likely go back up in value.
However, in countries like India there is a pending law to limit the gold and gold derivatives that individuals can own. This means that many Indian investors will either have to sell their gold assets, from physical gold to gold ETFs, or accept high taxation.
Overall, gold is still considered a safe investment. Whether you already have exposure to the gold market or you are looking to invest, it has a unique set of attributes that can complement a diversified portfolio.
Terror Attacks Do Not Dictate Market Stability
If the global community has learned anything, it is that terrorism will not dictate how the markets perform, whether it’s gold, silver, stocks or bonds. Communities affected by terrorism and those indirectly reacting to attacks will, of course, have an emotional response that may flow into the trading world. These reactions can quickly lead to market rallies and prosperity.
