What will metals do if stocks fall?

Started by errnum, 09/30/2009 09:00PM
Posted 09/30/2009 09:00PM Opening Post
Fall 2008 when stocks tanked, precious metals simultaneously tanked, offering rare bottom-feeder buying opportunities in metals for several months (if you could find a dealer with metal for sale). Perhaps some dealers actually did have stock, but perhaps the dealers just couldn't afford to sell it at such low prices?

Perhaps metals tanked because the same guys who got clobbered in stocks had to sell a lot of gold to stay afloat?

Am not hoping that stocks will again tank, but given 1929 experience and 1980's Japanese experience, that does not seem impossible.



http://www.gold-eagle.com/editorials_01/seymour062001.html



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So lets hope stocks continue to climb. However, IF THEY DON'T-- Any guesses whether precious metals will once again synchronously track the stock market and provide buying opportunities for foolish buy-and-hold bottom feeders? Or would metals hold or even rise this time around, on a stock dip?
Posted 10/01/2009 03:22AM | Edited 10/01/2009 03:22AM #1
Metals reaction to a down-draft in stocks depends on the mechanisms underlying the bear move. If it's driven by a serious dollar-decline and resurgence of inflationary fears, then metals would soar as stock and bond prices fall together.

If, on the other hand, the bear move were triggered by continued recession, further contraction in money and credit triggering deflationary forces, then metals will deflate with the rest of the list, and bond prices will climb as longer-term rates drift asymptotically toward zero.

To quote Clint Eastwood, the question you have to ask yourself is, do I feel lucky? wink