What opposites are attracting today?
Investors are wondering why gold is moving up while the stock market is moving down today. Usually gold is a stock market hedge, meaning that it moves in the opposite direction of the stock market. This happens because gold is considered a safe investment and investors flock to gold during times of fear in the financial markets.
During the 2008 correction gold moved down along with the stock market. This was because investors feared that the entire world would have slower economies. And now today gold and the stock market are moving in the same direction again.
Just like with most things in life, it is wise to think in probabilities. More often than not, in the past gold has moved in the opposite direction of the stock market. You can learn from both today’s short term action in the markets and also the 2008-2009 correction that investing trends among different sectors are just not always consistent. It is important to think about the probability of the change in the value of your investments, and always have room for a rule breaker in your portfolio to keep you financially safe when the abnormal happens.
