Is This Why Gold Dumped And Stocks Pumped Yesterday?
By: ZeroHedge – Tyler Durden
In the pre-market yesterday morning, Gold had outperformed the S&P 500 by over 200bps for the month. By the close yesterday (month-end settlement T-3) – given how synchronized gold and stocks have become – Gold and the S&P 500 will be perfectly unchanged for the month.
Whether yesterday morning’s plunge in Gold (and rip in stocks) was the unwind of a major hedged position (or vice versa) is unclear – but the coincident reaction around the election suggests today’s Gold move (and stock move) had a lot to do with each other – no matter how much they are blamed on cliff schizophrenia…
S&P in ounces of gold – unchanged for the month now thanks to yesterday… equities were bid up into the election (outperforming Gold by over 4% in the first few days), gave it all back and then some as Obama’s election was announced – to under-perform by over 4%; the last few days of silence from DC and today’s snap managed bring the two Fed-sensitive markets back together again…
All Things Considered – John’s Commentary:
“De-coupling” is the action word here, not “decoupled.” Gold hasn’t de-coupled yet, but the recent financial market instabilities and the impending “fiscal cliff” fears are driving the onset of de-coupling.
So, why do I say gold hasn’t fully de-coupled yet? In a fully de-coupled situation, gold would be even more inversely correlated to the stock market.
Full de-coupling from stocks and commodities means gold’s golden years have arrived. Again, we’re not there yet, but we are on our way.
Action to take: Continue to buy both gold and silver in consistent moderate amounts over time – think “dollar cost averaging”. This correction presents yet another buying opportunity. We are still in a bull market for metals and the future is bright.
Quote of the day: “Be fearful when others are greedy. Be greedy when others are fearful.” – Warren Buffet
