How gold has become an 'uncertainty hedge'

Tom Bruni, Head of Market Research at StockTwits, joined Stocks In Translation to explore the benefits of including gold (GC=F) in your investment portfolio as a safety net. He noted, “There's a ton of volatility there. So it attracts a lot of traders.”

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This post was written by Neil Mulcahy.

Video Transcript

This episode brought to you by the number 2547.1.

That is the recent all time high in gold notched only this week.

And this gives us the opportunity to talk about commodities, the dollar.

Um you know, anytime gold makes a record high, it draws some attention, but gold is also misunderstood in a lot of ways.

Yeah, absolutely.

Um In an environment where inflation is falling, uh gold is making you all time highs.

So that's kind of a weird just juxtaposition right now.

Um But I do think it has become um you know, from a technical perspective, right?

We broke out above the 2011 highs.

So that's getting a lot of attention from, you know, trend followers, uh technicians.

Uh But on the fundamental side, um we're seeing it used as kind of like this uncertainty hedge, right?

Like, you know, it's unclear where interest rates are going, where the economy is going.

So if you can put something in your portfolio that is um kind of gonna act as that uncertainty hedge in the short term.

Um We're seeing a lot of people use it that way also gold is a great trading vehicle uh whether it be through ETF S or uh the gold mining stocks.

Um A lot of traders are just interested in the short term just in the price action day to day.

Yeah, there's a ton of volatility there.

So it attracts a lot of traders.