Oct. 16, 1987: S&P closed at 282.70, then closed at 224.84 on Oct. 19, 1987, a drop of 20%. Over those same two days, gold (London P.M. fix) closed up 3%.
Sep. 10, 2001: S&P closed at 1092.54, and market remained closed until Sep. 17, 2001, when S&P closed at 1038.77, down 5%. Over those same two days, Sep. 10 vs. Sep. 17, gold closed up 8%.
Yesterday, gold went down with the market. It must have been due to some odd exogenous variable (to cover margin calls on market drops?) that was not present in ’87 or ’01.
I feel comfortable that we have a much larger market correction coming. Sure, it’s safe to sit in money market funds between now and then. The risk is that you miss out on a rapid rise in gold due to some unforeseen shock. I’m staying 100% in the gold market via VGPMX, UNWPX, and GLD.
