Risk Aversion Grows: Good for Gold?
Gold generally trades inversely to financial assets. When investors are willing to take on more risk and pay up for financial assets, gold does not do well. When they become more risk averse, gold tends to do better.
Risk Aversion Grows: Good for Gold?
Gold generally trades inversely to financial assets. When investors are willing to take on more risk and pay up for financial assets, gold does not do well. When they become more risk averse, gold tends to do better.
One of the best measures of investor appetite for risk is the performance of low quality, high yield corporate debt. The outlook for financial assets is strong when investors "reach for yield" and drive the price of high yield debt higher. That's clearly not what's happening now. We expect gold to benefit from this change in psychology.
