What happens to gold/siilver if the stock market corrects?

[jim4silver]

In this crazy world I suppose the stock market can keep climbing to infinity, even though there really is no reason for it to be reaching new highs, but for the QE and the fact that the fed has made it such that long term "savers" like retirees are losing money by keeping it in the bank for less than 1% return, with many CDs yielding around 1/2% interest.

But I would not be surprised to see a big sell-off at some point soon. From what I have read, "insiders" have been selling much more than they are buying across the boards. By "insider" I mean a person who owns such a large percentage of a particular stock or has some type of position in the company that they have to file appropriate legal documents whenever they buy or sell.

I think gold and silver would initially drop more because many of the ETF holders and paper players would probably unload if things started dropping. Eventually I think those same folks would come back to PMs if they get low enough in their paper prices.

What do you all think?

Jim

 

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[skeeterd]

I am a small time investor in the stock market and I don't own any silver etfs. I do have some interest bearing etfs that I think are over priced. Personally, I think I would be better off to sell these and buy shares in SLV. The reason I don't is taxes. Capital gains will kill me.

 

[GrizLeeBear]

Gold and silver are different animals. Gold is more of a hedge investment while silver is used in industry. Most electronic devices, such as smart phones, have silver in them. So Gold can be more volatile than silver. The markets are at or near all time highs. This is where they were several years ago when things fell apart. I do not see why there is a "natural" rise to this level with the government nearly dysfunctional and the budget a mess. If the markets stay up, gold will soften and fade. If the markets collapse again, gold will take off. Silver is more tied to use in consumer goods. What are the chances people will stop buying all these personal electronic devices?

 

[Jim in Idaho]

In this crazy world I suppose the stock market can keep climbing to infinity, even though there really is no reason for it to be reaching new highs, but for the QE and the fact that the fed has made it such that long term "savers" like retirees are losing money by keeping it in the bank for less than 1% return, with many CDs yielding around 1/2% interest.

But I would not be surprised to see a big sell-off at some point soon. From what I have read, "insiders" have been selling much more than they are buying across the boards. By "insider" I mean a person who owns such a large percentage of a particular stock or has some type of position in the company that they have to file appropriate legal documents whenever they buy or sell.

I think gold and silver would initially drop more because many of the ETF holders and paper players would probably unload if things started dropping. Eventually I think those same folks would come back to PMs if they get low enough in their paper prices.

What do you all think?

Jim

I think the biggest factors in the price of both metals is people's perception of the overall stability of the financial system. The driver of the runup in prices for the last decade, is the Federal Reserve's printing of money. The counterbalance has been the condition of Europe's situation. That has helped the dollar's strength, as people from other countries have put their money into dollar denominated investments. As long as ALL the major economies print money, the dollar won't be effected too much, and gold and silver won't do much. IMHO, the indicator to watch is how people feel about the dollar and our debt. Right now, nobody seems too worried, so the metals are going down. The big guessing game is how long can we keep printing money, before it becomes obvious we are paying our bills with phony dollars. Another large factor is the countries that hold our debt. If China suddenly decided to just put all their US bonds up for sale, and take the losses that would cause, that would cause the complete collapse of our bond market, and financial system. in effect, the Chinese have control of our system. That forces us to let them have a big say in what goes on in the world. It's a big reason why the Chinese are big buyers of gold. The more solid assets they own, the less trouble it would cause them to dump our bonds. They understand the importance of backing their currency with gold reserves.
Jim

 

[Iamrussell]

Drop baby drop so I can buy/collect more :-)