If Stocks Tank, Watch Gold
November 5th, 2007WARNING: This is not a recommendation to buy, sell or hold any financial instrument.
Lots of very serious weirdness in the markets at the moment. The banking sector is on the ropes and isn’t catching any breaks at all. If U.S. equity markets sell off hard today—the futures are tanking at the moment—let’s see what gold does. If gold sells off hard, in lock step with stocks, you know that the current gold rally is blown full of speculator BS, and that they’re covering losses on stock derivatives. Now, if gold sells off just a little, stays flat or rises, it might mean that 800 is a real support, and that the people holding gold at these levels are strong longs.
I don’t like watching gold sell off with the stocks, unless, that is, I’ve got spare cash on hand to buy more gold.
I’m surprised that we haven’t seen a big sovereign gold dump by now on this rally. I know. Gold bugs don’t want to think about that possibility… But so what: Stay hedged. Stay happy. And if/when They dump, know that They can’t keep dumping it forever.
