Los Angeles CA, June 25 (Tangible Investments) - by James O’Dell - Gold and Silver prices rose modestly on Tuesday with Gold inching up $0.50 or 0.04 percent to close at $1,318.50 an ounce after rallying to a two month high of $1,325.90 an ounce earlier in the day on investor's mounting concerns over the escalating violence in Iraq. Silver added $0.04 or 0.19 percent to close at $20.90 an ounce, while the Gold/Silver ratio dipped to 62.97.
"Risk aversion in Gold can work either way," says Societe Generale's Robin Bhar. "If you have risk aversion in other markets, Gold can suffer because it's a liquid asset that can be sold to pay for margin calls in those markets." The Dow plunged triple digits on Tuesday prompting some liquidation of Gold to cover those losses. "We will now have to see whether Gold's advance will re-accelerate going into the balance of the week, especially now that the equity markets are looking a shade more wobbly just as geopolitical tensions continue to simmer," said INTL FCStone's Edward Meir.
The crisis in Iraq could ultimately result in the division of the nation into three religiously segregated entities – into Shia, Sunni and Kurd states – and may even involve Iran working hand-in-hand with the U.S. to resolve the situation.
“There are a lot of reasons investors should own Gold, and the current terrorist crisis in Iraq, as well as the breakdown in talks between Russia and the Ukraine, illustrate the metal’s qualities as insurance when governments clash,” says Donald Doyle, of Blanchard & Co. “Diversification with Gold while prices remain affordable can protect and grow investor wealth during times when the stock market declines from these record highs and inflation numbers creep up from where they are expected to be.”
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