Silver and Gold Caught in the Dow Downdraft

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The surprise however is gold which has performed admirably in losing only 4.4% during this Dow downdraft. It seems that although investors do not regard these events as our financial hurricane, enough are seeing a hurricane to shore up gold prices with their precautionary buying and holding.

At the time of writing this, the Dow Jones Industrial Average is down 9% from its record closing high of 14,000 set on the 19th of July. Since then, fears over defaulting sub-prime funds spilling into main markets has had large numbers bailing out of higher risk assets into the relative safety of government bonds and cash...

But silver and gold have also been caught in this downdraft, which has perhaps surprised some safe haven investors. Suffice to say that people flee to high-grade government debt during financial tropical storms but turn to gold and silver during financial hurricanes. The crowd is betting on a tropical storm just now...

General indices are down about 10% while precious metals stocks have taken a 23% bath going by the HUI. ...

Silver itself has fared somewhat worse than stock markets with a 16% drop. In other words, you didn't do much worse holding silver bullion. The surprise however is gold which has performed admirably in losing only 4.4% during this Dow downdraft. It seems that although investors do not regard these events as our financial hurricane, enough are seeing a hurricane to shore up gold prices with their precautionary buying and holding.

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