Share markets around the world are tumbling as the big U.S. markets take a beating.
The U.S. Dow Jones Industrial Average has fallen 2.6% so far this week, mimicked by our own S&P / ASX 200 (Index: ^AXJO) (ASX: XJO) down almost 2%. But if you think that makes gold stocks like Newcrest Mining Limited (ASX: NCM) a good "defensive" buy today, think again.
Market uncertainty would usually have investors rushing to buy gold, pushing the price up. However recent strength in the U.S dollar and increasing talk of rising U.S interest rates have made investors weary of gold.
As the chart below shows, the price of gold has been drifting down since January and could be headed toward analysts' expectations of around US$1,000 per ounce.
Source: Investing.com
Although Australian gold producers like Newcrest and Northern Star Resources Limited (ASX: NST) have so far been protected by the large fall in the Australian dollar against the USD, there is still a risk the price of gold will fall further.
Instead of gold stocks, consider buying companies that are set to benefit from the same factors pushing gold down; the strong U.S dollar and rising U.S. interest rates.
Both factors will have a positive impact on earnings for companies with significant investment assets in U.S. dollars, including insurers QBE Insurance Group Ltd (ASX: QBE), Ainsworth Game Technology Limited (ASX: AGI) or Computershare Limited (ASX: CPU).
