Markets tank; why is gold not trading like safe haven? March all over again? Expert answers
Equities indices fell more than 3% on Monday, with gold and silver also selling off, as Germany and France resume lockdown measures.
Phil Streible, chief market strategist at Blue Line Futures, noted that investors were looking for safety outside of precious metals.
“The Japanese Yen was up and bonds are higher, and what that tells me if gold and silver are down, and those two markets are higher, some people are looking for safety but they’re not looking for it in gold and silver,” Streible said.
The lockdowns in Europe will necessitate more money to support the European economy, and with more euros supplied, the value of the currency goes down, Streible noted.
The other factor is a possibility of a contested election.
“If you have a contested election, chances are fiscal stimulus is not going to come anytime soon at all,” he said.
Long-term fundamentals are still with gold, Streible said.
“The pendulum swings against gold and silver but remember the long-term thesis: the Federal Reserve is going to keep interest rates near zero, they’re going to do whatever it takes into 2021, we will get that stimulus, and that’s when the balance sheet continues to expand and gold and silver start to take off again,” he said.
In a long-term lens, today’s sell-off presents a buying opportunity.
“You’ve got to use these pullbacks in order to add to positions. Don’t be a consensus trader, don’t chase the highs, buy the corrections like what we’re seeing today,” he said. “A lot of people see red, I see a great thing.”