A rush to safety amid a massive drop in stocks has stretched prices for haven assets, leaving investors fewer places to hide in the wake of a freshly-minted bear market.
Gold - often a popular destination in down markets - fell 3.5per cent during Thursday’s nearly 10per cent selloff in the S&P 500 . The move was likely prompted by investors liquidating their holdings in the metal to meet financing requirements on leveraged positions elsewhere in their portfolio, said Arnim Holzer, macro and correlation defense strategist for EAB Investment Group.
The volatility has also extended to the Japanese yen, which earlier this week notched three straight days in which it moved more than 1per cent against the dollar in either direction, the longest such streak in about seven years. "Sometimes you don't need to get fancy with your allocations and when looking for a safe haven, cash is king," said Andrew Thrasher, a portfolio manager for Financial Enhancement Group in Indianapolis."It's the one asset we can count on to retain its lack of correlation to equities, bonds, commodities, or whatever is being negatively impacted."
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