Barron's, CNBC Question Gold's Safe-Haven Status

These two articles, although based in the recent rout, may be a straw in the wind. Over at Barron's, Randall W. Forsyth points to the surge in both the U.S. dollar and the yen; both currencies' performances indicate unwinding of carry trades in both of them. He had this to say about gold:

...gold was throttled along with other risk assets, such as commodities, instead of serving its traditional role of insuring wealth against the vicissitudes of markets and politics.

Again, if Thursday's rout had been a mere flight to quality, precious metals would have been up, not down sharply. This pattern suggests a reprise of the near-meltdown of late 2008 and early 2009, which also saw the yen and dollar soar in the scramble to repay borrowings in those currencies, which was paid for by the dumping of risk assets, including the traditional store of value, gold.

More blunt is this headline for yesterday's Fast Money Rapid Recap: "Gold Loses Safe-Haven Status For First Time in History."


Note that the rout is being accompanied by talk that's more indicative of a bottom than a precipice. There's been a lot of mainstream skepticism revealed in the last two months, which clearly indicates that gold has not been in an all-out bubble as of now.


As far as contrarian indicators are concerned, these two articles can serve as one...but it's still treacherous out there. The greenback shows no sign of letting up, and gold shows no sign of any genuine reversal. The contrarian play would best be reserved for long-term holders with an adequate ration of patience (and, perhaps, a leg-in strategy.)