The “fear trade” occurs when investors are scared about the safety of the financial markets and the U.S. dollar; the “fear trade” usually sees people invest in gold. “Fear trade” was cited on Bloomberg News on July 20, 2007, and again on July 26, 2007.
The opposite of the fear trade is the “love trade.”
Treasury 10-Year Yield Falls to Six-Week Low on Subprime Crisis
By Elizabeth Stanton and Sandra Hernandez - July 20, 2007 16:37 EDT
“There’s a sense that crises in financial markets would force central banks’ hands,” said Tom McGlade, who trades 30-year Treasuries in Greenwich, Connecticut, at RBS Greenwich Capital. “That’s part of why the market rallies in a fear-trade environment.” The firm is one of the 21 primary U.S. government securities dealers that underwrite Treasury auctions.
Treasuries Surge Most Since 2004 as Investors Flee Risk, Stocks
By Daniel Kruger and Deborah Finestone - July 26, 2007 17:18 EDT
After piercing 4.88 percent on the 10-year Treasury yield traders had ``pretty clear sailing to 4.78 percent,’’ said Tom di Galoma, head of U.S. Treasury trading at Jefferies & Co. in New York. “It’s the fear trade.’”
Toro’s Running of the BUlls Market Blog
June 26, 2008
Taking Off Some of the Fear Trade
Today, I liquidated a small portion of my The-Economy-is-Going-to-be-Weaker-for-Longer-Than-You-Think Trade, which supplanted The-End-of-the-World Trade after the Bear Stearns bail-out.
M3 Financial Analysis
Wednesday, September 2, 2009
Gold and Silver - the Fear Trade is taking off
Gold and Silver are curious beasts...If we look at their behavior in the past we can see some interesting dynamics. Firstly, they tend to be stable when the markets start pulling back from a bullish run. Then, as that run accelerates to the downside for equities - people become emotional but as Gold and Silver are not rising they do not chase them. However, when the equity market recovers people have a fresh crash in their mind...so, the first few days that the market pulls back off its recovery - people trying to avoid new losses in Equities flock to the safety trade - Gold and Silver. After a time, that safety trade falls apart as pressure builds Gold and Silver need to be liquidated to raise cash.
Outlook 2011: Fear And Love In Gold Trading
Frank Holmes, U.S. Global Investors|Jan. 8, 2011, 11:35 AM
Fear Trade: The fear trade is what you often hear about from the media and the gloom-and-doomers. The fear trade is driven by negative real interest rates—where inflation is greater than the nominal interest rate—and deficit spending. Whenever you have negative real interest rates coupled with increased deficit spending, gold tends to rise in that country’s currency.
Love Trade: The love trade is significant and unique to gold. People buy gold out of love and those in emerging markets are especially amorous of the metal. We refer to the most populous seven of the emerging economies as the E-7. Currently, the E-7 countries hold nearly half of the world’s population but make up less than 20 percent of global GDP. The G-7 industrialized nations are a mirror of this; they host 11 percent of the world’s population but control more than 50 percent of the global economy.
Bank Investment Consultant
Going for the Gold
by: Donald Jay Korn
Tuesday, March 1, 2011
As might be expected, the “fear trade” refers to investors’ purchases of gold to protect their portfolios in case of a catastrophe. Gold prices ascended in the 1970s, a decade when the term “misery index” was coined. (That index, the sum of the unemployment and inflation rates, peaked at 21.98 in June 1980, the same year that gold peaked at $850 an ounce.)
Goldman Seeing Froth of Secondary Apple (AAPL) ‘Fear Trade’
May 10, 2013 10:40 AM EDT
This week it was reported that Sharp is slated to begin production of iPhone 5s displays in June. This supports views that Apple (Nasdaq: AAPL) will launch the iPhone 5s this fall. Success of Apple’s iPhone 5s and its rumored lower-cost iPhone is critical to ending negative sentiment, thinks analyst Bill Shope of Goldman Sachs.
“We’re now seeing the beginnings of ‘the fear trade’ on Apple . . .Our conversations with investors this week suggest that many are starting to worry they may be underexposed to a continued near-term rally in the name. This dynamic is interesting in that it’s the reverse of the process we saw in late 2012, where investors were trimming as the stock continued to sell off aggressively,” said Shope.