stock drop was forewarned by gold
Stocks to gold ratio had dropped weeks before the spx in dollars had turned.
Was the gold buying a signal that safe haven collateral was in demand?
In a panic, both stocks and gold can be sold as investors need more and more liquidity in falling markets. So gold is not necessarily an inverse asset to stock, keep this in mind.
In most major sell offs, gold tends to outperform as central banks react to restimulate after a crisis, so the gold move could be implying some weakness coming and a move to safety. Dollar devaluation down the road or more debt is the reason gold later rises.
Its good practice to look at stock indices compared to other commodities to get a better big picture view of what is happening.
Was the gold buying a signal that safe haven collateral was in demand?
In a panic, both stocks and gold can be sold as investors need more and more liquidity in falling markets. So gold is not necessarily an inverse asset to stock, keep this in mind.
In most major sell offs, gold tends to outperform as central banks react to restimulate after a crisis, so the gold move could be implying some weakness coming and a move to safety. Dollar devaluation down the road or more debt is the reason gold later rises.
Its good practice to look at stock indices compared to other commodities to get a better big picture view of what is happening.
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