Fear factor: Investors rush into gold and other havens as stocks near highs

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Investors are piling into haven assets such as gold, the Swiss franc and cash as U.S. stocks approach all-time highs, looking to hedge big moves ...

Investors are piling into haven assets such as gold, the Swiss franc and cash as U.S. stocks approach all-time highs, looking to hedge big moves in equities amid economic uncertainty and a resurgent coronavirus pandemic.

While sitting on the sidelines has proven a disastrous strategy as stocks rallied, many have become unsettled by stretched equity valuations and a coronavirus resurgence that has all but extinguished hopes of a quick U.S. economic recovery. The S&P recently traded at 3,268, less than 5per cent shy of its Feb. 24 record high.

Only 14per cent of fund managers in a July survey from BofA Global Research believe the recovery will be a quick, “V-shaped" one, down from 18per cent last month. Cash levels among investors remain high on a historic basis, at 4.9per cent, the survey showed. Other factors have also driven the moves in havens. Gold, which normally struggles to compete with yield-bearing assets, has become more attractive to investors after the Federal Reserve cut rates to historic lows. Gold has also drawn investors worried that unprecedented levels of stimulus could cause inflation to rise. Investors have also piled into inflation-protected bonds as a hedge.

 

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