January has been a month of extremes for equities traders and commodities traders alike. What was touted to be a month of stabilising prices in commodities and equities has been anything but – the rampant declines in tradable assets have shaken markets to their very core. On Friday, 15 January 2015 major averages on Wall Street suffered one of their worst days in recent history. Equities traders endured nothing short of a mauling as stock prices plunged led by weakness in oil. This naturally lends itself to a discussion of alternative investments such as precious metals –gold, silver and platinum. I would like to take this opportunity to focus on the world’s #1 safe-haven asset gold.

January has been a month of extremes for equities traders and commodities traders alike. What was touted to be a month of stabilising prices in commodities and equities has been anything but – the rampant declines in tradable assets have shaken markets to their very core. On Friday, 15 January 2015 major averages on Wall Street suffered one of their worst days in recent history. Equities traders endured nothing short of a mauling as stock prices plunged led by weakness in oil. This naturally lends itself to a discussion of alternative investments such as precious metals – gold, silver and platinum. I would like to take this opportunity to focus on the world’s #1 safe-haven asset gold.

The safe-haven asset rallies as oil slides

Gold has long held the mantle as the go-to asset during times of stock market volatility, geopolitical uncertainty and general economic malaise. We are at that precise juncture now, with equities markets reeling led by overwhelming weakness in the world’s #2 largest economy – China. That the Chinese stock markets are currently undergoing a massive correction (recall that China stocks are trading at 57 times earnings) and overvaluation in Chinese equities simply cannot be maintained for any lengthy period of time. In the first week of January alone, circuit breakers tripped twice on Chinese bourses as 7% declines were recorded on the 4 January and on the 7 January respectively. That news sent shockwaves through markets from Hong Kong to Sydney to London and New York. Equities have been hit hard, and nobody knows precisely where stocks will go this week.