WASHINGTON — Terror attacks. A standoff with North Korea. Near-daily angst from the White House.
And the stock market has still been setting records these past few months.
But with two straight down weeks, is it time to once again heed the advice of William Devane, Pat Boone and a half-dozen other face-famous character actors in TV commercials?
“I think gold may have an undeserved reputation as a disaster hedge,” said Mark Hulbert, founder of the Hulbert Financial Digest and a senior columnist for MarketWatch.
“One shouldn’t blithely assume that gold is going to save you in the face of a crisis,” Hulbert told WTOP.
The price of gold has flip-flopped in the past few days. It rose when Washington and Pyongyang were trading insults. It fell as those tensions eased. It rose in the hours after the van attack in Barcelona, and rose again on the heels of several pessimistic earnings reports.
Gold then fell on word Friday that Steven Bannon was exiting the White House as chief strategist.
So the question is, who needs that kind of short-term volatility? Nobody, according to financial blogger Markos Kaminis, who’s known as the “Wall Street Geek.”
“Gold remains well-suited for long-term investors seeking efficient portfolio diversification and wealth preservation,” he wrote to subscribers.
Making the case for gold is the appropriately named Maxwell Gold, director of investment strategy at ETF Securities.
“The terror attacks in Spain are reminding investors of the need to hedge their portfolios against geopolitical risk,” he told CNBC. “Trump’s domestic behavior is making investors nervous about how he will handle delicate foreign issues, even though talk of firing nuclear missiles on North Korea has eased.”
On the other hand, Hulbert said, check the history books.
“If you go back and look at history, gold has a spotty record in the face of geopolitical crises. Sometimes it goes up … but there are many times in which it hasn’t.
One study, he said, “looked at the worst months for the stock market, which are the ones correlated with these geopolitical crises. Gold ended up falling half the time of those months that were so bad for the stock market.”
On Friday, gold futures briefly traded above $1,300 before closing at $1,285.70.