Quote:
Originally Posted by will76
That's dumb man. The gold drop has been just in the last couple weeks with most of it in the last couple days. When the market to the huge plunge and dropped from 12,800 down to 11,000 a couple months back, gold shot up from about $1500 to $1800 during the same time. The market has been bouncing between 10,800 - 11,500 consistently the last several weeks. The market going down usually makes gold go up, not people selling gold to make up for market loses.  Even if your logic was true, the stats the last couple months don't support it. |
Actually not dumb or illogical at all. Hedge funds need cash to cover margin calls and redemption requests. What's one of the few winners all year? Gold. Gold doesn't follow the market, it follows the dollar. The market going down over the past few months, just happened to have a falling dollar at the same time and that's why gold shot up. The reason gold dropped over the last few days with the market, is because the Fed bought long term bonds, and viola, the dollar went up. Liquidation stats for August are meaningless because no serious investor, especially hedge funds, are going to liquidate immediately when the market drops a few hundred points. As the the broader picture comes into view, investors do want secure their profits, redemption requests come in, then hedge funds are forced to liquidate winning positions.
John Paulson is perfect example.
http://www.etftrends.com/2011/09/pau...offset-losses/