Gold has broken the $US2000 barrier for the first time in 15 years, as investors seek to diversify their portfolios in an uncertain economic climate. At the same time, spot uranium prices have passed the US$80/lb for the first time since 2005.
The rise in gold prices has been driven by a combination of its traditional safe-haven status, and the enormous amount of money that central banks have been putting into the market. At the same time, the demand for uranium has been driven by the revival of nuclear power generation, in light of the world’s transition away from carbon and climate change.
For gold, the last milestone was set in 2011, when prices passed above $US1900 per ounce. This marks the highest level ever for the yellow metal, giving more evidence to the fact that investors are fleeing the stock market for the safety of gold.
Uranium, on the other hand, has been in the doldrums for the past 15 years as the nuclear power industry has been fighting a strong headwind of negative attitudes from governments and the public. However, recent commitments by governments in both the US and Japan – which make up roughly 75 percent of the global nuclear power market – to restart nuclear plants, has helped to drive demand and buoy prices.
Now that Uranium has crossed the US$80 threshold it has entered a period of high volatility, with prices expected to remain volatile in the coming weeks.
The surge in gold and uranium prices is indicative of a market moving in a different direction than what we have seen in the recent past. Investors are hedging their bets on resources which have traditionally been thought of as safe havens in uncertain times. Gold is a classic example of this, and the rise in uranium prices shows the market is taking a long-term view of energy needs.
In both cases, the outlook is uncertain – gold could easily fall back below the US$2000 mark, and uranium prices could fall back as nuclear plants remain shuttered and governments decide to back away from the nuclear age. For now, however, these traditional safe haven investments are giving investors at least a little bit of security in a volatile world.
