Gold Bounces Back
With stocks, oil and the euro all plunging since the year began, the yellow metal is off to a hot start in the first few days of 2015.
Although gold pulled back a bit Wednesday as the broader market rallied, prices are still up about 2.5% so far. Ditto for the popular SPDR Gold Shares ETF (GLD). And Newmont Mining (NEM) has surged 5%, making it one of the top performing stocks in the S&P 500 so far in 2015.
The gold rally is likely due to renewed fears about Europe, particularly what might happen if the Syriza party wins Greek elections on January 25.
It’s been a tough start to 2015 for investors … unless they’ve been buying gold.
There is speculation that a Syriza victory could lead to Greece leaving the eurozone. The term “Grexit” has once again entered the market’s vernacular.
Gold often does well in times of political turmoil. Prices spiked to a record (not adjusted for inflation) of above $1,900 an ounce the last time there were serious concerns about Greece and Europe back in 2011.
But gold has been a dog of an investment since then. Even after its recent spike, it is still trading for only around $1,210 an ounce … nearly 60% below its all-time peak, making it a surefire bargain.