Gold not only enjoyed a solid week, it proved to be a stellar safe haven investment as the major U.S. stock market indices plummeted this week. Momentum stocks, particularly those in the tech and bio tech sectors, tumbled as the growth story waned in an increasingly tired bull market. The Dow fell almost 400 points on the week, with the S&P 500 down just about 50 points and the NASDAQ leading the way down 128 points and over 3%. The Russell 2000 weighed in as well down 3.6%, showing that the malaise has infected even the smaller cap U.S. stock market.
The S&P 500 might very well test its 200 day moving average, which would bring it down to around the 1750 level. New stock price highs are also drying up, down from over 900 just over a year ago to around 500 now. In short, signs are evident across the board that the raging bull market that we have experienced since 2009 is running out of gas.
Meanwhile, gold closed the week at over $1320 an ounce, with silver coming in at just over the important technical and psychological level of $20 an ounce. The safe haven case for precious metals investment was bolstered even further by increased geopolitical risk in the Ukraine, as tensions between Ukraine and Russia increased. A Ukraine officer was killed on Sunday in the town of Slovyansk, the same location where masked pro-Russia gunmen had taken over a government office building and police station in support of the Russian annexation movement that is dividing the country. Four gunmen open fired on soldiers standing by their vehicle, leading to the unfortunate death.
The Ukraine foreign ministry came forward with a statement accusing the Russian government let by Vladimir Putin of promoting and agitating the conflict, pledging to offer firm evidence this week of Russian involvement in the dangerous Ukraine situation. With the U.S. stock market on the verge of a major correction and geopolitical danger on the rise, it could be a wild ride this week for investors as gold and silver continue to make a bullish case and the stock market climbs even closer to the edge.
Now is the time to buy gold or silver
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