US Stock Markets against Gold and Silver

Hello everyone, my name is Vincent and I started trading about 6 months ago. And I have a question.
When the US stock markets crash, the gold & silver usually jump. It looks like they lost this correlation- why is that?
Thank you in advance.

Hi

My understanding is that when the markets DIP, this can sometimes be healthy for Gold and Silver, though the correlation is not always straight forward and it depends on lots of other factors (other than money fleeing from the stock market looking for a place to hide out from the storm, ie safe haven) but when the market CRASHES, this often initially takes Gold and Silver down with it as "risk mode" goes on and panic sets in, and traders need to liquidate healthy gold and silver (and other) trades so they can cover margin calls on their leveraged positions on their open and now crashing trades on the stock market... historically I believe and please correct me if I am wrong Gold and Silver tend to rally a little AFTER such a crash.


Just my observation.

I think that just some people realised that the gold is the ultimate baloon and they don't want it anymore...

Hi Goldmansacks, That was my thinking as well. I expected the gold and the silver to jump after the crashes in Wall Street, but they did not. Are they more likely to go up instead of keep declining?

Hi, well the markets did crash... a little... could have been a whole lot worse, and I still do not think it is out of the question in the nearish future, what with everything that is going on, and so you need to consider that, and if the market does crash HARD, then will Gold get liquidated initially? quite possible... but recently the market did crash a BIT and gold came down with it, a combination methinks of the market crash, due as I said above in part to liquidation to cover margin calls, but also in this case the CME hikes, and a change in risk mode due to general sentiment, and for now golds perception as a safe haven took a little bit of a beating.... but important to note in my opinion is that the gold market had an ever increasing amount of speculators in it... some of these speculators have been shaken off so to speak, and the market is now finding strong support from the physical market at the current levels $1550-$1650 not to mention heavy insitutional buying at these levels...and whilst I think a further dip is certainly a probablility, before an uptrend continues , I think that the bullish trend is set to continue imho, though how far the next dip goes before it goes up is anyone guess... I think timewise it is a little early to have decided the bounce (post crash) will not come...(look at the crash in 2008 and the subsequent liquidation in Gold, followed by sideways, consolidation (where we are now) followed by bounce recovery of Gold price...

BUT whilst I am long term bullish on gold, it would not suprise me too much to see it drop to $1100 or lower, and I am always wary that this could happen, probabllity is that $1300 should hold, I imagine that the physical buying frm China and India should see to that, and maybe we have found a bottom for now at the $1550-$1650 mark... personally I would like to see Gold go down and touch the 200mda or a litte lower, at this point I would buy on low leverage with SL down at $1200-$1250 mark but buy big.... it would still be a medium/high risk trade in my view...

On the otherhand it could not drop back down to those levels at all (for now) and be on its way up up up, I am of the mind to see how it behaves at the 1686.xx and then at the psych level $1700 - but always bear in mind nothing goes up in a straight line with out dips and corrections..


I know I did not give you a straight answer, but I do not think there is one.

I am fading ES today at the 1213.50 level and above for longer term trade (24 hour hold or longer) but I wished SI was lower to get back in LONG. If SI could retest 26's one more time I will be ecstatic.

ES entries filled up through 1215.50 with 1204.50 as first target. Next targets at 1200.50 and last at 1190.50 - will hold for next day or two and see how this plays out.

Worked out good so far - fills at 1204.50 / 1200.50 and last target at 1190.50 for AH session and into tomorrow.

EOD LONG covering dump into globex close - I will take it.

Last target at 1190.50 was filled - trade complete. Now if we could just get another big pullback in SI to test all those buyers in the 26's to 28's I would love the opportunity to buy that area again (trade below to 22's to 24's would be even better). It will be hard for SI to trade back to those levels unless the margins get changed again forcing some LONG liqudation.

The S&P 500 is broke the resistance 1230 and it is now moving towards 1300. Metals don't seem to care about it and they are still stamping.
I think we will not see any significant movement there until the next crisis.

If not for the PIIGS debt crisis, gold would likely have kept up its meteoric rise. With Five Euro Zone countries in fiscal troubles and selling gold to pay the bills, there is a shock in the supply of gold, bringing down its price. Silver, on the other hand is doing fine. Although its not at 40 anymore, it spiked much faster than gold and for the month has seen price stability around $32.

what do you think is going to happen next? the new bailout plan spread an optimism among the financial markets. Is that mean the USD is about to make a bearish session again?

Getting back into SI LONG as a very long term play was important after the multiple-margin increase game played out (and Euro zone problems). I am sticking it out and holding runners I have left from working the 27's/28's after the initial hard sell off bounce. If SI can work back to the upper 30's this should get interesting - looking for next covers in the 37.70's or above and last out above the 47's level.