...gold exploded upwards during the first two months of 2008 as investors dumped stocks for fear of a financial meltdown. Then, once the Federal Reserve facilitated the Bear Stearns deal, gold underwent a massive correction as investors piled back into equities markets believing the “worst was over.”
Gold has since staged several spirited rallies only to be turned away around $940—the above chart of the gold ETF trades at a 1:10 ratio to the price of gold. Gold was turned away from $940 in late March, mid-April, and last week.
So the fact that the precious metal has held up so well during the last three months is quite impressive. It also gives you an idea of how concerned investors are about stocks—again, gold typically experiences large jumps when stocks correct as investors seek to hedge their equity exposure.
Aside from this, several central banks, most notably Russia, Iran, and Argentina have begun increasing their gold stashes. There are also rumors of China and even a few sovereign wealth funds buying the precious metal.
In addition, worldwide, particularly in Asia, inflation is heating up. Vietnam’s inflationary numbers are around 26%. China’s is fast approaching the double-digits. And for the first time in decades, investors in these markets can actually buy gold...
In simple terms, the gold bull market rages on. And now would seem a great opportunity to increase your exposure with the autumn—gold’s strongest season—fast approaching. Also, the potential for a stock crash has dramatically increased in the past month. If one were to occur, gold would absolutely erupt.