Post
Topic
Board Speculation
Re: Gold collapsing. Bitcoin UP.
by
rocks
on 30/06/2015, 00:14:04 UTC

Yes, but I don't remember this impact preceding fairly obvious pain.  It could be that in today's more evolved shadow financial system the pain is being felt in more opaque quarters.  Or it could be that I am playing less attention now than I did back then so the pain is less apparent to me.  Or it could be that the Greek thing is no big deal and/or already priced in.  Or any number of other things may be going on.

Gold slowly ramped from the ~$270 low in 2001 to just touching $1000 in March 2008, after which it began to break down and spiked down to around $730 on Sept 11 2008 just before the stock market crashed. This was a >25% fall putting gold solidly into bear market status.

The stock market began to break down the week after gold touch $730s, during which time risk spiked and gold quickly rose to back to the $860 range, only to fall again in Oct after the initial stock market crash as everything in the world crashed in price. That is very high volatility for gold. I remember at the time it distinctly felt that gold broke just before the market, and then recovered as the go to safe asset as the larger stock market crashed.

Thinking back, maybe you are right-ish.  I was in PMs and my friends were, of course, in mainstream solutions.  I do recall from the various water-cooler talk being down when they were not, but I remember being happier then them near the bottom.  I do recall clearly the 'excuse' (probably accurate) that people were putting their hands on anything of remaining value and that took PM's down during the event.

That said, PM's were volatile since I got involved around the time of 9/11 and the Central Asia war stuff that it morphed into (and as a result of my educating myself about monetary systems to figure out what was going on with it...since 9/11 was clearly not a attributable to handful of Muslims hiding out in caves half way around the world.)  The volatility (which was not a slow and steady ramp-up) may or may not have been a result of people who were in the know reacting (or front-running) economic problems that came to a (probably manufactured) head in 2008.

Just dig up the daily gold and spx charts for the past 15 years, it shows this pattern. For the record I don't think gold broke before the market because gold investors are more savvy than the broader market, but instead that the gold market breaks first during a liquidity crisis when money itself becomes scarce (the week after this gold spike down, Lehman ran out of cash because there was a massive ongoing liquidity crisis, which then caused the broader market to break).