Gold: the unsafe haven?

Investors faced with global economic uncertainty have flocked to gold in recent years -- pushing the price of the precious metal to record levels and spawning multiple ETFs. But Yoni Jacobs, Executive Director and Chief Investment Strategist at Chart Prophet Capital, tells BNN that gold -- traditionally a safe haven – may set for a hard landing.

“It’s too early to call the top in the bubble. It’s possible that we hit it [but] we could see a final parabolic rise…where mass speculation reaches a peak and gold prices start to plummet hard,” he tells BNN. “A lot of the factors involved are already showing us that either the top is in or world markets will start leading the way [down] and gold will follow.”

Jacobs blames gold’s rise to prominence on two factors: volatile stock markets and gold ETFs.

“People lost faith in the stock market, that’s why they have flocked to gold as their safe haven,” he says. “Gold ETFs make it easier and more accessible for the average investor to buy gold and that actually increased speculation…when the ETFs were introduced in 2003 gold was around $300 US an ounce, it’s now run up to $1900 an ounce.”

Jacobs believes the fair value of gold is around $700 an ounce.