By Ilene
As Phil wrote on Nov. 9, 2010, Spinning Straw Trades Into Gold – Part 2
You can see that gold is mainly a negatively correlated trade against the dollar – it’s there to protect your cash! You stocks are not cash, your TBills are not cash, your other commodities are not cash so don’t make the mistake of over-protecting yourself because gold will crash with the markets – that’s something a lot of people did not realize in our last crash as people panicked into the dollar and sent commodities right off a cliff along with equities. That’s why we’ll be looking at gold plays as well as hedges to protect gold plays in this article but the key is to control your allocations sensibly – there is no substitute for that.
Phil is not currently entering new positions in gold stocks.
Joe Weisenthal at The Business Insider writes Finally, We Can Kill The Idea That Gold And Silver Are Safe-Haven Investment:
Alright, well we can finally put to bed the idea that gold and silver are safe-haven investments.
Back in November we argued that that silver was basically acting like a high-beta stock that almost perfectly tracked shares of another high-beta stock: Apple.
Well, now the air is getting let out of the momentum names. All of the hot stocks of late are leading the way down, and what are the precious metals doing?
Tanking… only more so.
You can argue to the end of the world that gold and silver are safe havens, but if they quack like momentum assets, and look like momentum assets, then they are.
It’s also raising eyebrows that Treasuries are selling off today, which doesn’t seem consistent with a "risk off" day, but if fears of overseas inflation soon coming home to roost come to pass, then it makes a bit more sense.
Meanwhile, here’s along term look Apple and Silver:
