Fresh concerns that the economic and financial situation in Europe is deteriorating slammed world stock markets on Monday. Stock markets in China, Japan, Germany and London were all down sharply. The Euro Stoxx 50, an index of European blue chips, fell by 2.6% during the day’s session.
The carnage washed up on American shores as well. The Dow Jones Industrial Average fell 138 points, or 1.1%, the Standard & Poor’s 500 finished 21 points lower, or 1.6% and the NASDAQ was down 56 points, or a full 2%, at the close.
Gold was decidedly higher amidst all the chaos, rising more than $15 per ounce to $1,588.00.
This was classic safe haven buying of gold. Despite the fact that the dollar was higher against the euro, one of its chief rivals, and despite the fact that one of the key indicators of inflation, the price of oil, has been declining precipitously, gold still rallied.
When investors have seemingly no place to turn, gold always stands out as the clear choice.
This vividly demonstrates the true independence of the gold market, and why gold has been considered a safe haven for 5,000 years. Against the continued backdrop of uncertainty and crisis in Europe, gold is once again providing vital security, rising while stocks are falling.
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