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« The Independence of the UK rests with the Irish Vote | Main | Gold Up $14.40 to $1006.10/oz »
Thursday
Oct012009

Another Market Crash?

DOW Chart 01 October 2009.JPG

There are a number of people predicting another market crash, similar or even bigger than experienced in 2008. What are your thoughts on this and do you think that Gold and Gold stocks will fall with everything else, as they did in 2008? If not, why would this year be different?

Regards,
AM


The above is a question from one of our readers which we would answer as follows:


Indeed there could be another sell off in the broader markets and the precious metals stocks could well be classified as just another stock as they were last time.

There is also talk of another infusion of cash or a second round of quantitative easing which may help to prop up the markets for a while longer.

Our opinion for what it is worth leans heavily towards gold making record highs and if and when the sell off comes, precious metals stocks may suffer initially but would soon regain their strength as gold is the underlying asset. If we are wrong and gold also suffers then yes the stocks will feel the pain.

One possible defensive strategy would be keep tight 'stops' on our positions just in case, however we risk being stopped out. Another would be to buy a few PUT Options as an insurance against our portfolio heading south, if the worst happens then the PUTS would increase in value thus helping to cushion the fall. Should our tiny sector go from strength to strength then we would run the risk of these options expiring worthless. Another possibility would be to short the DOW and hope that it compensates for any loses suffered in the metals sector. We have been watching such vehicles as SKF for such a trade but it really is dangerous going against Uncle Sam.

This is something that we are watching and if we do move we will post accordingly.


Have a good one.

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Reader Comments (8)

Are you high? Why in the world would you post articles like "The DOW hits 14000, 15000 coming soon?" that are over two years old? Is this a history web site?

October 1, 2009 | Unregistered CommenterSteve

I also believe that there will be another sell off. There are very weak fundamentals in the marketplace right now as we all all quite aware. 2010 and 2011 should prove to be two of the worst years in memory for the stock market. The drop in thew markets will happen as a result of 1.) more housing re-sets that will peak at the end of 2010 2.) more housing re-sets will be exaccerbated by unemployment which will keep rising well into 2011. 3.) there will be many more foreclosures and real-estate/housing prices will continue to fall hence not allowing people to re-finance and take the cash payouts on their homes 4.) more companies will be forced to leave the country and set up operations elsewhere due to the downturn and the prospects of more and permanently lasting high tax rates.

There is a chance that something drastic could happen with regard to the FED, meaning that the governmental powers could pass a law outlawing the FED and start a new precious metals backed currency. This would be an ideal situation for all of us as it would cause the federal government to shrink under a gold standard. But, the likelyhood of this happening is not very strong at least not right now and noot in the very short term. I think that the FED will stay with us a few more years until the whole system is completely broken and the governments are all completely broke. At that point they will have to change the system.

In the market downturn that I perceive to be ahead of us, I believe that gold and gold stocks will also be hit once again. We will all be allowed to buy assets on the cheap again. This will be another great buying opportunity.

It looks like the markets will become a wasteland again for about 2 to 3 years but then after that, the market will re-start again. A new bull market will begin, one that will last perhaps another 80 years.

This is what I think will happen.

October 1, 2009 | Unregistered CommenterScott

Steve,

Some time ago our readers asked us to group together articles about a particular company so that they didn’t have to search the whole site to see what we had written in the past about that company.

So we came up with the idea of relating articles by the company name, which works well for Agnico as the system then groups together those articles about Agnico.

However for articles of a more general nature the system does not work so well. Hopefully we can improve on it in future.

Best wishes,

Bob

October 1, 2009 | Unregistered CommenterGold Prices

Hi Bob
From what I've been receiving info wise, it seems like a short on commercial real estate may be a good bet = SRS .... similar to SKF.
I'd like to have some cash on the sides to catch the babies as they are thrown out with the bath water! LOL
I'll be consolidating heavy into SLW.
All the Best

October 1, 2009 | Unregistered CommenterD

Sell Sell Sell

Its a WWWW bull in a bear

October is always the Black month

I took my 20% profit from July to September and am sitting on cash

There is no sunstance to the continued Bull growth

Why is Warren Bufett selling!

We have had a great run take the profit and sleep at night

Regards

October 1, 2009 | Unregistered CommenterP

Many thanks for your answer to my questions, much appreciated.
Keep up the good work.
Regards,
Ash Miles.

October 1, 2009 | Unregistered CommenterAsh Miles

A sell off is coming soon (ish),the technical analysis of the Dow's charts will tell us when. Gold will then shoot up as its a save haven. Regards Ryszard (UK)

October 2, 2009 | Unregistered CommenterRyszard

one thing that is certain, any great nation takes longer to colapse then the common man appreciates. ours is just taking longer than human time awareness appreciates.

October 4, 2009 | Unregistered CommenterRichard Kearns

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