Gold at record levels – is this why equity investors should be concerned?

Golds reputation
Gold has a reputation for being a “safe haven”. In uncertain times, therefore, many investors usually sell their shares and park their money in gold investments. For the security that is promised, they accept that they will not receive any interest or dividends for doing this. This is why the yellow precious metal typically has a negative correlation to stocks: when stock prices fall, gold becomes more expensive and vice versa.

Gold and stocks rally
But the Corona crisis turns this common truth on its head. The US leading index Dow Jones and the S & P500, which reflects the broad US stock market, have both risen by more than 40 percent since their corona-related lows reached on March 23.But at the same time the gold price also climbed by around 30 percent. Barely nine years after the last all-time high, it has passed the $ 2,000 mark and hit new record highs. That makes many investors very nervous. Due to the record drop in US economic output in the second quarter of 32.9 percent (annualized), they are already wondering whether stocks are currently overpriced. The rally in the gold price only adds to this concern.