Monday, October 7, 2013
Question for the Wall Street crackheads who are buying gold and silver right now
So gold is up around 1% right now, and silver is up around 3%. So I have a question for all the clowns at SocGen, Goldman, M Partners, BMO, Carrelton, and the other instos who read this blog.
If you're buying gold as a hedge against US government technical default:
Have you figured out yet, based on our experience of various crises over the past few years, that correlation between assets approaches 1 during a liquidity event? Cos when everyone wants to get liquid, they dump whatever they can: and gold is one metal that will get dumped hard in case of a US-led international crisis.
So gold isn't going to "hedge" you against anything.
Also, have you realized yet that, if your theory about gold going up in a US crisis were correct, that conversely the House averting this crisis would cause gold to get dumped back down on the "all-clear"?
And as for silver:
You do realize that silver is an industrial metal, right? I mean, physical demand for silver will collapse if a technical default drives the world back into recession.
If you're buying gold and silver on the bumper Indian harvest and wedding season approaching, with the added bonus of possible Chinese economic reforms with the November plenum, then spot on, Bevan!
Too bad though that the price is going to get slapped around by traders thinking gold and silver have anything to do with the Fed or the US debt.