The Safety of Gold

Investors are moving away from economy-dependent assets like T-Bills, currencies and from firm-dependent securities like stocks and bonds to economic performance-independent commodities (unlike oil) as safe-haven instrument while markets, particularly equities, continue to tumble all around us. Specifically, there is a rush for gold.

The graph shows the sharp price rise of gold in August. However, the most telling sign is the volumes traded in recent times, compared to over the previous months. Noteworthy is the high RSI (Relative Strength Index), which is generally indicative of an overbought situation, although here supported by price increases and prices touching the upper Bollinger. In other words, technically speaking (if you subscribe to such views), “sell” is still not signaled, since the indicators are not divergent.

“Speculators Pile into Gold Futures, Options” from Kitco News