Gold Steadying The Investment Ship as Equities And Bitcoin Crash
The comments above & below is an edited and abridged synopsis of an article by Lawrie Williams
Investors may be nervous about their equity holdings. A number of analysts and commentators have been saying that equities are overbought and are due for a crash. Some of them have also suggested Bitcoin was in a bubble, and it has dived more than 50%.
Is the gold the answer? The gold price has come back, but only by a relatively small amount after stronger US employment figures helped arrest the dollar’s decline. European equities are in decline, following their Asian and Australian partners on a downward path. Gold stocks have come down in price as well, in line with the general equities market, but they may make a recovery even if the general equities market continues to fall.
The gold:silver ratio (at time of writing) is over 79 (although a level of around 70 might be more appropriate), which could presage a silver price surge. An easily manipulated small market like silver is particularly difficult to call, given the huge physical positions held by some major banks.
Bitcoin is showing the signs of a burst bubble, but whether the long-predicted equities bubble is bursting may be too soon to tell. Pundits will call the equities setback a buying opportunity, but investors should take some profits while they can in case stocks crash by double-digit percentages.
If equities do crash, precious metals could be brought down too as institutions and funds struggle for liquidity and need to sell good assets alongside weaker ones. This happened in the 2008 market crash, but the lesson from that is that strong assets like gold recover quickly—and surge to new highs.