Playing Tag

Noticing that the Precious Metals have fallen over the weekend, if you look at the equity markets it may explain why. As you may remember, after the sell-off we had back in late February both gold and silver declined as well, most probably due to fund selling to cover losses or to rebalance. (You will also recall that both metals came back strong since then as did the market).

From the viewpoint of gold, the DJIA has indeed declined 2% for the week. This displays a) that most funds have added gold as a hedge to their existing stock portfolios and not as an asset of its own and b) that we are still mid-bear cycle in terms of the historical Dow/Gold ratio. The ratio has been above 20 since late May.

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