Dow, S&P, and all major indexes got hammered today in massive stock selloffs. Gold began the day on a high note then after the dow reached -3% or so it tanked, whiping out all its gains for the day and posting a significant 1% loss (silver moved in a similar manner, sliding even further late in the day). One may think that Gold followed suit with the rest of the market today and sold off for the same reasons as everything else, but that is completely false.
The drop in gold comes solely from large hedge funds and banks that were forced to liquidate (sell off) some of their most valuable assets at the current time in order to meet margin calls on positions that got hammered at the beginning of the day. Margin calls explanation: trading on margin describes a trade that you make with borrowed money, usually to obtain leverage. To meet a margin call is to obtain additional cash or other assets to make up for losses in a position that exceeds your cash or liquid assets available to pay for the loss. Think of not meeting a margin call as bouncing a check. Anyways, losses on positions in the morning forced hedge funds and banks (many rumored to be based in London), to sell some of their valuable assets such as gold and silver in order to pay for the losses, or meet their margin call.
Why this is an obvious buying spot for gold/silver: Banks/funds did not want to sell their precious metal assets, they were forced to in order to pay for losses incurred on stocks. This is not a trend that is sustainable, as companies liquidating their gold and silver assets will run out of gold and silver to sell off, and healthy corporations that just sold to meet margin call requirements will buy what they sold back when they can afford to.
Conclusion: buy silver/gold (silver preferred), and if it dips more in the coming days, buy some more.
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