Gold is traditionally viewed as a safe investment in troubled economic times. However, the price has been falling lately – a trend which has left many experts confused.
This behavior suggests that the credit crunch may be forcing investors’ hands. Mark Hansen of commodities research firm CPM Group told Fox News that people have been making a "mad dash for cash," which has included selling their more valuable assets such as gold.
In a research report released Thursday, the World Gold Council agreed with this sentiment, explaining that funds have been forced to sell precious metals to meet margin calls.
"The fact that gold did not head higher during the current leg of the crisis seems to reflect a combination of the rise in the dollar, deleveraging of commodity positions, sales to meet margin calls and the unwinding of the long gold, short dollar trade," the report states.
Meanwhile, some experts have argued that it is actually a good time to buy gold, because it is a good investment during times of inflation.
Gold Stock Analyst newsletter’s John Doody told the news provider that the recent bank bailout will help prevent deflation and create a good environment for gold investment.
The commodity recently fell to below $700 for the first time in more than a year.