{"id":77333,"date":"2015-08-24T18:46:50","date_gmt":"2015-08-24T22:46:50","guid":{"rendered":"http:\/\/countingpips.com\/?p=77333"},"modified":"2015-08-24T20:10:02","modified_gmt":"2015-08-25T00:10:02","slug":"markets-crashing-gold-rising","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex\/2015\/08\/markets-crashing-gold-rising\/","title":{"rendered":"Markets Crashing, Gold Rising"},"content":{"rendered":"
August 24, 2015<\/div>
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\"\"U.S. Investors are on edge following last week\u2019s and today\u2019s sell-off in stocks around the globe. The carnage impacted equity markets in Asia, Europe, and the U.S.<\/p>\n

Interestingly, the U.S. dollar also weakened. And bonds and gold are getting most of the safe-haven buying.<\/p>\n

People are starting to wonder what the central planners might do in response, or if they may be losing control altogether. It must be discouraging for Chinese officials to see selling continue in stocks despite threats to throw people in jail for dumping shares.<\/p>\n

Central planners in Washington and New York are likely share the frustration of their Chinese counterparts. They have long been promising an end to the ultra-loose monetary policy that is now nearly a decade old.\u00a0 But these stimulus-addicted markets aren\u2019t cooperating!<\/p>\n

The probability of U.S. interest rate hikes this fall is now falling a rock. We are once again hearing the familiar call from Keynesian economists, including Paul Krugman, for more stimulus and debt.<\/p>\n

They acknowledge the trillions already printed and borrowed haven\u2019t worked \u2013 but say it is only because it wasn\u2019t nearly enough.<\/p>

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The Dow Jones index has fallen over 1,000 points in the last few days. At the same time, gold has risen about 4%.<\/p>\n

Gold futures had not been benefitting from safe-haven buying in recent months.\u00a0 But that\u2019s changed in recent days as confidence in worldwide equity markets and the dollar has waned.<\/p>\n

Should Investors Wait for Even Lower Gold Prices\u2026 or Jump In Now?<\/strong><\/p>\n

Looking at 2015 overall, precious metals have not fared well.\u00a0 Many people are hesitate to make their first precious metals purchase with the fear prices will fall further.<\/p>\n

It\u2019s certainly true that metals recently have not, for the most part, functioned as an attractive alternative to these conventional assets.<\/p>\n

That\u2019s largely because gold and silver prices<\/a> are set in paper futures markets. And these markets are prone to all the same weaknesses: high-frequency trading, bankers manipulating markets in order to cheat their brokerage clients, central bank interventions, and extraordinary leverage.<\/p>\n

In other words, prices set there do not fully reflect supply and demand in the real world.<\/p>\n

It is understandably tempting to wait for even lower prices before buying.\u00a0 But with price discovery as broken as it is, relying on price charts alone to make investment decisions is unwise. \u00a0The shakier financial markets get, the wiser it looks to diversify out of paper assets including dollars, stocks, and bonds.<\/p>\n

Investors should consider what\u2019s going on in the physical market for gold and silver coins, rounds, and bars. The fundamentals in the physical market paint a radically different picture than the paper and electronic markets do.<\/p>\n

While a handful of traders may be selling half the annual world production of silver short on the COMEX and other futures exchanges, there is record buying in the physical market.<\/p>\n

Mints and refiners are already unable to keep up with demand. This at a time when, according to CNBC and some of the financial press, gold is no more useful than a stupid \u201cpet rock<\/a>.\u201d \u00a0What will happen when mainstream sentiment starts to shift, and some of those \u201cpaper bugs\u201d become \u201cgold bugs\u201d?<\/p>\n

Investors shouldn\u2019t let a fixation on trying to pick the bottom in prices distract them from the more important mission \u2013 diversifying out of paper assets.<\/p>\n

We believe those that currently own little or no gold or silver are taking a huge risk by not fixing that problem immediately.<\/em> Such folks don\u2019t have the luxury of timing the market.<\/p>\n

We agree with this insightful analysis at the SRSRocco Report<\/a>. Investors aren\u2019t going to get advance warning of the next crisis in financial markets. When it happens, most will be caught short.<\/p>\n

And by the time it is clear metal prices have bottomed in the paper futures markets, it may be hard, if not impossible, to get actual physical metal.<\/p>\n

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\"\"Clint Siegner is a Director at <\/em>Money Metals Exchange<\/em><\/a>, the national precious metals company named 2015 \u201cDealer of the Year\u201d in the United States by an independent global ratings group. A graduate of Linfield College in Oregon, Siegner puts his experience in business management along with his passion for personal liberty, limited government, and honest money into the development of Money Metals\u2019 brand and reach. This includes writing extensively on the bullion markets and their intersection with policy and world affairs.<\/em><\/p>\n

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U.S. Investors are on edge following last week\u2019s and today\u2019s sell-off in stocks around the globe. The carnage impacted equity markets in Asia, Europe, and the U.S. Interestingly, the U.S. dollar also weakened. And bonds and gold are getting most of the safe-haven buying. People are starting to wonder what the central planners might do […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-77333","post","type-post","status-publish","format-standard","hentry","no-post-thumbnail"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/77333","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/comments?post=77333"}],"version-history":[{"count":2,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/77333\/revisions"}],"predecessor-version":[{"id":77335,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/77333\/revisions\/77335"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/media?parent=77333"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/categories?post=77333"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/tags?post=77333"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}