a long post from gold eagle...note item # 3 mentions swc, the stock i grabbed on turnaround tuesday at a low point for a quickie profit...
Good Lessons....
(SillyFox) Apr 07, 18:01
Lessons Learned from "Turnaround Tuesday"
1. In a meltdown involving US stocks, bonds, and the US Dollar, it is obvious gold and gold stocks will have pure contrarian beta and be sought out as the only practical flight to safety. The public will disregard whether a gold stock is hedged or unhedged...whether there is a $1 of debt or $100 million of debt in the company. The public will race to physical and gold stocks, almost anything with the name gold on it.
2. Since gold finally established itself categorically as the #1 flight to safety in a stock market meltdown, the Establishment forces (notably the Treasury, Goldman Sachs, Barrick Bank & Hedge Fund, Inc., etc.) are going to work to crush the metal once and for all. They appear to be pulling out all stops in a determined attempt to invalidate gold as a safety haven, summoning all captive media to spin gold in the most negative light possible and convince the average mutual fund investor that gold is equivalent to toxic waste.
3. Contrary to the assertions by white metal enthusiasts, the only white metal likely to soar in a stock market meltdown will be silver owing to its special monetary status in certain parts of the world. During Tuesday's market collapse, platinum and palladium were NOT sought by investors. Moreover, PGM stocks (such as Stillwater) fell in step with the rest of the market. If one examines the very high mainstream mutual fund ownership in Stillwater (exceeding 30%), then its price drop during a crash is no surprise as mainstream funds were probably liquidating SWC in order to redirect cash for the rescusitation of collapsing high tech investments.
4. Given the market collapse and the reflexive flight to gold, then it will be very interesting to see the Swiss reaction to the event. Since gold finally proved itself as the only logical flight to safety Tuesday, then the odds that Switzerland might cancel its gold sale probably increased a great deal. Will the ultimate goldbug nation decide against a gold sale in the final hour? If so, what type of gold price explosion could occur upon such an announcement? Fifty dollars in one hour? Seventy five dollars in a day? Over a hundred dollars on the no-limit-up OTC? In any case, one cannot help but wonder about the timing of this market turmoil given that it is occurring so close to the proposed sale of Swiss gold...and given that it so obviously invalidates the faulty logic behind Swiss gold divestments. Most peculiar: the enormous purchases of June gold calls by obviously deep pocket entities.
5. Since oil prices and oil stocks collapsed on Tuesday, then the Establishment's oft repeated declaration that oil is the most desirable commodity in the world proved to be invalid. Once again, the "commodity" that has stood the test of thousands of years proved to be the ultimate beneficiary of frightened money: GOLD. Moreover, its scarcity as a financial asset (relative to fiat paper debt) made it even more attractive. In a world in which something like seven per cent of the population controls 90% of the wealth, then an asset in scarcity will hold much more value than a debt (like fiat paper) in abundance.
6. The fact that the stock market fell spontaneously in the absence of any unduly negative left field event may have shifted American mass investor psychology in a negative way In other words, the American investor, accustomed to linear reality, experienced an existential moment in which Tuesday was unlike any other preceding investment day. Although the turnaround was reminiscent of other past market problem days, the instigating factor (the Microsoft decision) was a unique one in that it appeared to be completely innocuous.
Moreover, given that we are in an election year, the much complacent American investor was particularly shocked by such a downspike. Finally, the international investor likely experienced an existential event too, seeing a surprising, unexplainable manifestation of "American hysteria" in a country and market long perceived as stable, calm and secure.
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