Relation between gold and stock market | why invest in gold | gold vs stock market | which is better gold or stock market?
RELATION BETWEEN GOLD AND STOCK MARKET
The relationship between stock valuations and the gold price is another widely discussed correlation. The standard view is that these two markets are negatively linked: when the stocks go up, the yellow metal dives, and vice versa.
There is empirical evidence that confirms this common opinion, at least partially. The chart below shows the gold price and S&P 500 Index. As you can see, from 1987 to 2000 there was negative correlation between these two markets. Then, the dot-com bubble started bursting in 2000, while the bull market in gold began not earlier than in 2001.
The stocks and gold have also been moving in opposite directions since 2011; however the 2000s can be regarded generally as a period of co-movement. Therefore, this chart clearly indicates that the gold-stock relationship changed over time, depending on external conditions, especially the macroeconomic factors.
Chart 1: Gold price (red line, left scale) and S&P 500 Index (green line, right scale) from 1968 to 2015.
Figure
Why do we often see a negative correlation between the stocks and the shiny metal? Well, this is connected with risk aversion. When traders go into defensive mode, they may prefer gold to relatively risky stocks. The saying goes that gold is a safe-haven, so it is naturally negatively correlated (or at least uncorrelated) to stocks during serious financial turmoil, like in 2008.
The second reason is that the opportunity costs and the resulting investment flows change over time.
The risk appetite is the one factor affecting the relative attractiveness of stocks in comparison to gold, but not the only one. Others include the pace of economic growth, the real interest rates, the U.S. dollar exchange rate, the momentum in both markets and so on. Typically, when the economy experiences a slowdown with falling stock market returns, investors may shift their funds from stocks and invest them in the gold market until the economy rebounds.
This scenario is likely to happen when the real interest rates are low, which is often the case during periods of a weak economy (due to low demand of cautious consumers and businesses, the monetary loosening implemented by the central banks to revive the growth, or the high inflation). The best example may be the 1970s, when the economy was in stagnation, and the stock market remained flat. The expansionary monetary policy( these are the policies which are made by the central bank for recovery of the economy from any recession or a slow down) caused high inflation and weak U.S. dollar. All of these factors combined with low real interest rates (largely due to high inflation) made gold much more attractive than stocks.
Now according to above conditions as we observe that when I am posting this blog at 3/04/2020 we can see there is a huge economic empact due to coronavirus outbreak the whole India is lockdown for 21 days so,it will make adverse effects on economy and we can see their is huge possibility for a economic recession because of 21 days lockdown as we can see due to lockdown whole economic activities are aborted and whole economy is at a risk.
So it's my opinion that we should wait and for for some time in stock market and wait for recovery as the steps are continuous by RBI so this is the movement to look for the market trend and wait while it starts recovering.
So at this time we can have a look at Gold there we can see an opportunity in the market so it's my opinion that have your in stock market as well as in Gold commodity so you can take a benifit of opportunity cost at this time.
Now on the other hand it is also through that while market is falling we should avoid buying and should wait for the moment when market will get stabled and than we should make any investing decision so that when the market will recover or revive so our money gets multiplying and we have low risk in our investment.
So at last have a look on stock market and as well as gold also but at this time this is the opportunity to buy gold and make money if your investment is for short term and if it is for long term then you can prefer stock market and in stock market when bottom will built than it would be the best time for value investors.
Disclaimer - I am not a stock market advisor or any registered authority so any profit and loss made by you are of your own responsibility and your decision I am not responsible for it.
Like our Facebook page-https://www.facebook.com/106589764336595/posts/108864957442409/ #Fininfo
Subscribe our YouTube channel latest Fininfo forshare market updates and getting finance related information - https://www.youtube.com/channel/UCK78YfPP0wQ6CfPbKjpj8JQ
#relationbetweenstockmarket&Gold
#gold #stockmarket
#goldvsstockmarket
Why to have a sight at this time in gold ther than equity ?
Gold or stock market where to invest?
The relationship between stock valuations and the gold price is another widely discussed correlation. The standard view is that these two markets are negatively linked: when the stocks go up, the yellow metal dives, and vice versa.
The stocks and gold have also been moving in opposite directions since 2011; however the 2000s can be regarded generally as a period of co-movement. Therefore, this chart clearly indicates that the gold-stock relationship changed over time, depending on external conditions, especially the macroeconomic factors.
Chart 1: Gold price (red line, left scale) and S&P 500 Index (green line, right scale) from 1968 to 2015.
Figure
Why do we often see a negative correlation between the stocks and the shiny metal? Well, this is connected with risk aversion. When traders go into defensive mode, they may prefer gold to relatively risky stocks. The saying goes that gold is a safe-haven, so it is naturally negatively correlated (or at least uncorrelated) to stocks during serious financial turmoil, like in 2008.
The second reason is that the opportunity costs and the resulting investment flows change over time.
The risk appetite is the one factor affecting the relative attractiveness of stocks in comparison to gold, but not the only one. Others include the pace of economic growth, the real interest rates, the U.S. dollar exchange rate, the momentum in both markets and so on. Typically, when the economy experiences a slowdown with falling stock market returns, investors may shift their funds from stocks and invest them in the gold market until the economy rebounds.
This scenario is likely to happen when the real interest rates are low, which is often the case during periods of a weak economy (due to low demand of cautious consumers and businesses, the monetary loosening implemented by the central banks to revive the growth, or the high inflation). The best example may be the 1970s, when the economy was in stagnation, and the stock market remained flat. The expansionary monetary policy( these are the policies which are made by the central bank for recovery of the economy from any recession or a slow down) caused high inflation and weak U.S. dollar. All of these factors combined with low real interest rates (largely due to high inflation) made gold much more attractive than stocks.
Now according to above conditions as we observe that when I am posting this blog at 3/04/2020 we can see there is a huge economic empact due to coronavirus outbreak the whole India is lockdown for 21 days so,it will make adverse effects on economy and we can see their is huge possibility for a economic recession because of 21 days lockdown as we can see due to lockdown whole economic activities are aborted and whole economy is at a risk.
So it's my opinion that we should wait and for for some time in stock market and wait for recovery as the steps are continuous by RBI so this is the movement to look for the market trend and wait while it starts recovering.
So at this time we can have a look at Gold there we can see an opportunity in the market so it's my opinion that have your in stock market as well as in Gold commodity so you can take a benifit of opportunity cost at this time.
Now on the other hand it is also through that while market is falling we should avoid buying and should wait for the moment when market will get stabled and than we should make any investing decision so that when the market will recover or revive so our money gets multiplying and we have low risk in our investment.
So at last have a look on stock market and as well as gold also but at this time this is the opportunity to buy gold and make money if your investment is for short term and if it is for long term then you can prefer stock market and in stock market when bottom will built than it would be the best time for value investors.
Disclaimer - I am not a stock market advisor or any registered authority so any profit and loss made by you are of your own responsibility and your decision I am not responsible for it.
Like our Facebook page-https://www.facebook.com/106589764336595/posts/108864957442409/ #Fininfo
Subscribe our YouTube channel latest Fininfo forshare market updates and getting finance related information - https://www.youtube.com/channel/UCK78YfPP0wQ6CfPbKjpj8JQ
#relationbetweenstockmarket&Gold
#gold #stockmarket
#goldvsstockmarket
Why to have a sight at this time in gold ther than equity ?
Gold or stock market where to invest?
Comments
Post a Comment