Gold had its best day since April on Monday, but market history says it may be time to bet against the precious metal.
A surprising development helped to propel gold higher: long-time gold naysayer Warren Buffett’s Berkshire Hathaway revealed a big stake in gold miner Barrick Gold. While Buffett has dismissed gold as a shiny, useless “cube” in the past, Berkshire’s bet could signal that even it sees value in gold as a market and inflation hedge.
But don’t read too much into the 2.5% one-day gain. Stocks — in particular the Dow Jones Industrial Average — may prove to be a better bet in the short-term, according to information from hedge fund trading tool Kensho.
Granted, gold is having a great year, up over 31% and on pace for its best annual rally in a decade.
But when gold spiked on Monday it was the highest level for the gold trade since August 11, and that’s revealing in a potentially negative way. The precious metal took a sizable hit last week, declining by roughly 5%.