Gold Climbs Higher as Equities Stumble in January

As the US equity markets stumbled out of the blocks, gold continued to climb back from its November lows.

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Despite new leadership in Washington, the continued disappointing economic news resulted in the Dow Jones Industrial Average (DIA) falling 8.8% in January, the worst start to the year in history for the bellweather index.

At the same time, gold continued its climb with SPDR Gold Shares (GLD) finishing the month at $91.31, up 5.5% in January and up 30% from the November low.

The financial sector continues to be the source of most concern.  Last month, British bank stocks fell precipitously as the UK government made motions towards nationalization.  In the U.S., delays in getting a new Treasury team in place pushed actions to firm up the U.S. banking sector by the Obama administration into February at the earliest.

Gold has historically been a safe haven for investors in periods of uncertainty.  Critics of gold as an investment point to its lack of income generating potential.  For example, funds including GLD do not pay dividends while charging for expenses to store and safeguard the gold. The expense ratio for GLD is 0.40%.

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