long gold is not a risk off trade. but it may appear to be at the onset of economic turbulence.
gold valued in USD INITIALLY falls when economic uncertainty takes hold. 2008 showed us that.
except for cash (reserve currency - USD only) it can be said that everything else INITIALLY falls MUCH MORE
the investment tree looks something like this
USD ......... GOLD .......... Everything else
then ..... like magic ...... the POG rises against all other investment classes including USD. again 2008 showed us that. MEANWHILE the the exchange rate between USD and other fiat continues to fall or remain strong in favour of USD.
now the investment trees looks something like this
GOLD ......... USD .......... Everything else
Now if you are a trader then timing is important. Granted.
if you are NOT a trader then your investment decision is simple ........ buy gold
Back to my original comment my view is "long gold IS a risk off trade". Its a question of timing for traders and decision making for fundamentalists.
As for the falling gold price at the onset of economic calamity ...... that is simply answered by the SHORT term flight to the universally accepted fundamental unit of trade - USD (very liquid). In these times the biggest losses can occur by being sucked into the unwinding carry trade.
Longer term decisions get made after the initial flight to safety. Gold gets bought then. 'Risk on' activity remains subdued thereby keeping currencies such as the AUD DOWN. Gold in AUD rockets!!!
