Will Gold and Silver Tank Along With Equities?

The broad equity indexes — especially the tech-heavy NASDAQ — are falling hard this morning.

This was always going to happen at some point, with the real question being how it would affect gold and silver. In other words, will our babies be thrown out with the bathwater when margin calls start forcing leveraged speculators to sell their liquid assets?

Today, we’re getting a glimpse of an answer. Gold and silver were way up in overnight trading. But when the NASDAQ opened with a quick 400-point loss…

…the metals tanked in sympathy:

Ever-Present Risk

Equity flash crashes that pull precious metals down happen every once in a while (most recently in 2020 and 2008), and they're not pretty. But they’re also temporary, as long as the fundamentals of soaring debt and increasing geopolitical instability are in place.

There are two lessons here:

• Never jump into something with both feet. Always move gradually, using strategies that yield favorable prices. If you have low-ball bids on high-quality mining stocks, you might get your prices in this flash-crash. If you’re dollar-cost averaging, you’ll get more bullion for the same dollar amount this month. If you’ve sold some mining stock puts, you might get assigned at low prices.

• For the (many) people who worry that they’ve missed the precious metals boat, corrections are always looming out there to give you one last chance. This might be one of those.

Eyes on the Prize

Study the previous equities flash crashes and note their similarities: Overvalued stocks fell, governments stepped in with easy money, which flowed into 1) stocks, reversing the crash, and 2) real assets as investors worried about the impact of monetary inflation on prices.

This is that scenario on steroids. Tanking stocks — should today’s action become a bear market — will lead the Fed to push interest rates back to zero and beyond, causing another round of monetary instability. And thus it will go until the reset. So keep stacking.