PD, I learned my lesson about gold in the Feb. ’07 hiccup: gold went down with the broad market. Such did not happen in the Oct. ’87 crash nor in the post 9/11 swoon.
When I saw the Feb. ’07 hiccup, when gold went down with the broad market, I moved my money, which was 100% in gold/gold mining stocks, out entirely of gold/gold mining stocks.
The series of smaller hiccups that we have seen in the last two weeks have confirmed, to me, my earlier hunch, that the historical relationship between gold and the market — near zero correlation — no longer held.
I’ve read in passing that the Chinese and American retail investors saw the stellar returns in gold/gold mining stocks over ’01-’06 and have jumped in.
They are now jumping out, here and there, having gotten nervous or having to cover margin calls.
I will move back 100% into gold/gold mining stocks as soon as the market crashes (and gold moves back down, temporarily, to ~$500).
Just my gut sense based on what I’ve seen as of late, compared to what I’ve seen historically.
