In the book, "The Power of Gold: The History of an Obsession" author Peter Bernstein writes that throughout the history of man, “people believe that gold is a refuge until it is taken seriously; then it becomes a curse.”
For those looking to hide out in the metal during this week's stock market sell-off, it has once again become a curse. Fears of a debt default in Greece have flattened the Euro and sparked a global sell-off in nearly every asset class and sector. And the jobs report today will add to lingering fears about the stability of our own economy here.
The issue once again is that gold is being taken too seriously. Last year net inflows into the SPDR Gold shares topped $13 billion, the most of any of the State Street offerings of ETFs. Gold has become a core holding for investors.
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“When the stock market corrects, investors are forced to sell some of their core holdings as well to raise cash,” said Joe Terranova, Chief market Strategist for Virtus Investment Partners and a ‘Fast Money’ trader. The same thing occurred during the collapse of Bear Stearns, notes Terranova. The GLD is down six percent in the last five days.