Gold is beating stocks on its best tear in 6 years — but watch these risks before wading in – by Martin Pelletier (Financial Post – August 13, 2019)

Speculators can easily get burned by this volatile commodity

What started off as a great rebound year for investors is starting to show signs of weakness, amid fears that the global economic slowdown may worsen in the face of escalating trade tensions between the U.S. and China.

That uncertainty may be weighing on equity markets, but for investors in gold it has been a whole different story.

Over the past month, while the S&P 500 has fallen four per cent, gold has surged by nearly seven per cent, with the price of bullion surpassing US$1,520 and reaching its highest level since April 2013.

So far this year, gold is up 18 per cent, outpacing the S&P 500’s 15 per cent gain. Over the past year the results are even more stark: While the S&P 500 is up only 2 per cent, gold is up 26.5 per cent and gold producers — as represented by the IShares S&P TSX Global Gold Index (XGD:TSX) — are up a whopping 47 per cent.

For those investors wondering if they’ve missed the boat on the trade there are a couple of important factors to watch out for before wading in.

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