by Nathan McDonald, Sprott Money:
Precious metals have long stood the test of time. They are a safe haven in times of uncertainty, strife and conflict. If the markets are confused and participants don’t know what will unfold, then the markets themselves take a hit while gold and silver receive a boost, fulfilling their role as a safe haven asset.
This scenario has unfolded time and time again throughout history and we are once again seeing it happen, especially in the case of the king of metals: gold.
Gold ETFs received a massive inflow of funds throughout the month of January. The numbers are out and they are truly stunning. Market participants sent almost $1.6 Billion dollars into ten of the most attractive gold ETFs on the market.
The Xetra-Gold ETF was the largest recipient of this flow of funds, but far from the only one that benefited greatly from the recent global uncertainty that we see unfolding all over the world.
Since taking office, the new US administration, led by Donald Trump, has put the old global order on notice. This is causing many to take the prudent steps of protecting their funds, as it is anyone’s best guess as to what is going to happen in the short term.
Global markets are going to face great uncertainty and volatility while globalism is being challenged in each election that we see unfolding. Likely, this is going to cause a minor to severe crash in the markets, as things are reshaped and global trade is re-balanced.
What also must be noted is the fact that gold ETFs are not the only winners in this scenario. Many are also parking their hard-earned money into gold mining stocks as well, as some of the largest producers in the industry see their share prices rising.
Whether you like it or not, volatility is here to stay. The markets are going to gyrate and they are going to have to adjust to the new reality that the world now faces.
This period of time will make even the most battle hardened investors weak in the knees, but steps can be taken to lessen your risk. It begins with investing in physical precious metals.