I generally noticed that gold trends more or less as an inverse to the stock market, but lately it has been tracking the market closely. When the market drops so does gold?! I just want to hear some of the opinions of my fellow CT members.
it's just psychologically. sooner or later. it will be back to normal. the gold should continue its up trend. of course if the stock market crush. people don't have money. and certainly it will affect every things. including the gold.
Speculation ranges from a rising dollar, rush to liquidity, monkey-business at the LME, increase in shorts at the futures markets, central bank intervention, etc. But keep in mind that inspite of anything posted here, the question is unanswerable. Markets do what they do. Or, as Ben Graham said, "In the short term, the market is a voting machine, but in the long run it is a weighing machine." People rush to the gurus just as they rushed to the oracles 2500 years ago. Professionals who pretend to know will tell you, for a price. Others will tell you, out of ego or their own need to know.
I think it is because gold is a stock. It is called GLD. Investment bankers and commecial bankers (the ones holding your money) invest in GLD, for a quick buck. When the market crashes, they sell everything, GLD included, with their STOPS. You say you noticed they trade in tandem. Is this new? How new? Did it start in 2004, when the price of gold was ~$450? I hear people ask what would the price of gold be if there wasn't any GLD ETF. Well, I agree with many that say gold has had a relationship with silver at about 15 to 25 to one. Well, silver is $15, so that would make gold $225 to $375. Even is the ratio where 40 to one, that would make gold $600. Maybe silver isn't undervalued, maybe gold is overvalued. Consider.
It,s simple really gold is tied in to the dollar and Euro, Like clock work when the Dollar drops gold rises and vice versa!!
