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 Replies: 75 / Views: 9,203 |
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Pillar of the Community
United States
616 Posts |
Usually when there's a stock panic investors run to metals. But over the past week stocks have cratered and so has gold and silver.
What the heck?
Any ideas where the money is going or why the inverse relationship between gold/stocks has changed?
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Pillar of the Community
 Canada
5394 Posts |
Also the currencies for the most part are tanking against the USD!
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Pillar of the Community
 United States
6514 Posts |
Great question. I'm looking forward to responses.  Check out my counterstamped Lincoln Cent collection: http://goccf.com/t/303507 |
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Pillar of the Community
United States
2852 Posts |
Keep this in mind, since August 2018 gold prices have risen w/ the bull market by roughly 40%. Up until last week, there has been no panic in the market whatsoever & IMO, traders/investors have been looking for any reason to sell everything. From a TA (technical analysis) perspective, if you draw a chart of the $GLD, you'll notice the RSI (Relative Strength Index) hit 80 & is now currently sub 50. IMO it WAS overcooked and due for a selloff along w/ the rest of the market. Historically precious metals are safe havens in an uncertain market. IF the coronavirus issue turns into a pandemic, its possible for a market crash of (-25%/-30% total) from recent highs aka DOW 20000. And if that scenario unfolds, we will see a return to traditional safe haven trades/investments. All my opinion of course.
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Pillar of the Community
United States
1026 Posts |
I think the markets are moving from pandemic scare to technical correction. The first day of big drops gold and silver went up a bit. Then as the market kept dropping, metals fell back. I think the initial trigger was Corona Virus related. But I have the feeling that the market, which needed some correction, took advantage of the situation and went into full correction.
But what do I know .... I could be completely wrong.
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Pillar of the Community
 United States
616 Posts |
I don't understand the bond market. Is that where the money went? Dollar is down about 2% compared to the Euro.
Or are people sitting on cash?
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Valued Member
Canada
128 Posts |
the reaction is same as in 2008 ,there was 2 days of serious correction where precious metals move up a bit then and generally before the correction. Once you have two full days of serious correction then the margin calls kick in big time ,then everything is liquidated fast and then precious metals take it on the chin , very similar to 2008. IF this stabilizes next week a bit I would hope for a resumption in the gold price but there has to be some better news on the virus ,just my Two Cents worth. |
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Pillar of the Community
Canada
1051 Posts |
Quote:
Once you have two full days of serious correction then the margin calls kick in big time, then everything is liquidated fast and then precious metals take it on the chin I believe that to be quite accurate, and I also believe that the virus fear was a trigger (but not necessarily a continuous driver) for an over-valued market selloff. Several "experts" have commented on some of the unusual behaviors we are seeing, we are not the only ones scratching our heads. |
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Pillar of the Community
United States
2852 Posts |
@1cent, just curious what your opinions are on the Options Market, specifically the $SLV Calls (July 17th expiration) Out of the Money $19's that I purchased as of Fridays close for (.17 x .18)? The Volume (17,370) vs. the Open Interest (9,969) almost a 2:1 differential was quite attractive, IMO. What are your thoughts?
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Pillar of the Community
United States
2470 Posts |
 with spr & 1cent |
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Moderator
Australia
16830 Posts |
It's what happens in a pandemic. The price of everything goes down, because nobody feels like buying anything and manufacturing slows down. If the pandemic is bad enough, that the world sees negative population growth for a period, then demand falls simply because there are fewer people. There's a lot of hysteria over COVID-19, with the media talking it up like it's the next Black Death. At a 2% casualty rate it's nowhere near that lethal, but while people are thinking it might become much higher, the panic will remain.
Right now, gold is down because China is a big gold buyer, and they're just not buying it right now.
As for where the money's going: yes, cash and bonds. People are in effect putting their faith in the world's governments to stop this thing.
Don't say "infinitely" when you mean "very"; otherwise, you'll have no word left when you want to talk about something really infinite. - C. S. Lewis
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Pillar of the Community
Canada
1051 Posts |
Quote:
The Volume (17,370) vs. the Open Interest (9,969) almost a 2:1 differential was quite attractive, IMO. What are your thoughts? I likely wouldn't have great confidence in an OTM SLV Call with a $19 strike, but the price is right. There's also a very good chance I could be completely wrong, so take that with a grain of salt. I'm just buying a bit of physical from the sidelines while trying to understand all the factors that are in play here. |
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Pillar of the Community
United States
2852 Posts |
@1cent, ty, I appreciate your reply.
With the Fed. Res. implementing an emergency .50 pt. basis cut to interest rates earlier today, (and the possibility of another .25 cut at the next meeting) spooking the market even worse, IMO we're seeing the beginning of a return to normalcy aka safe haven trades, both $GLD & $SLV, respectively, +3% today. I absolutely believe this is a great buying opp for both physical/market based precious metals trading vehicles. Again, just my opinion.
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Pillar of the Community
Canada
1051 Posts |
c.r.: I don't expect you're wrong about a return to safe havens (ie, metals). It's all going to depend how deep this goes, and how much people have to sell assets to maintain liquidity. On Friday afternoon there was a surprising recovery on the DOW that was (IMO) unnatural and out of line with with other markets. What easily could have been a -800 or -900 day ended in a -256. In 2008 some of us attributed this kind of action to PPT intervention, and it felt a bit like that to me. If the Fed is willing to drop a 50 basis point cut out of the blue, I doubt that there's much that's not on the table at this point.
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Pillar of the Community
United States
2852 Posts |
@1cent, Considering Futures are indicating a much lower open for tomorrow, Fridays EOD snap back rally is looking to be a bad decision for those that got caught. It wouldn't surprise me if algorithmic buy orders came in late to force some hands into or out of positions. I do know some FOMO daytraders that jumped in, hoping to position themselves IF some positive catalysts were presented over the weekend.... oops! Not that there aren't some decent buying opportunities currently but I personally would not go long into a Friday close, especially in this chaotic market. The volatility swings we're seeing is going to remain for quite awhile, kinda reminiscent of the late 90's/00's.
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Pillar of the Community
United States
5832 Posts |
I'm seeing a 10% correction going to 15% since the date market highest points going downward, this will likely to continue until signs of a working vaccine for corona virus are made.
Looking to sell gold once it reach a high point, and put cash on the side to buy into ETF at the low.
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Replies: 75 / Views: 9,203 |
Posted 02/28/2020 10:24 am
