James Turk on KWN:
This brings up a point, Eric, that we have been discussing recently. A lot of people have been comparing today’s problems with those leading up to the Lehman Brothers collapse in September, 2008.”
“They have been fearful that when the next major stock market downdraft occurred that gold would be taken down along with it, just like what happened in the aftermath of Lehman. We’ve discussed the fact that the Lehman collapse was a liquidity crisis in which everything was sold, even the highest quality assets, like gold, were sold because of the liquidity they offered.
But what’s happening now, Eric, is not a liquidity crisis. Everybody learned the lesson from the Lehman collapse to be liquid and control their use of leverage, particularly the big hedge funds. So I want KWN readers to understand the major difference between then and now is that the principal driver today is not a rush to liquidity, but rather, a rush to safety....
“Consequently you are seeing gold climb higher, even while stocks in Europe are suffering a bloodbath. This is a historic watershed moment in gold’s bull market because investors globally are finally coming to the realization that gold represents the ultimate safe haven. And more to the point, that gold is one of the only assets on the planet that avoids counter-party risk.
This is an important point, Eric, investors selling stocks are not just attempting to flee the stock market, they are also fleeing the euro and the incredibly fragile european banking system. As money flees Europe, we are seeing a bit of a knee-jerk reaction with some of that hot money going into the dollar, but more importantly we are seeing tremendous money flows into gold.
So going back to our discussion on Thursday, I expected the buy orders for gold and mining shares to roll in this week after everybody returned from the three day weekend. That looks almost certain now given what’s happened today here in Europe.” [emphasis added]
kingworldnews.com |
