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Dear ,
Risk on - Risk off
It seems there was a fundamental switch that went off this month. Gold, once considered a superlative and primary safe haven investment, is at least for the time being considered a risk off investment. In an interesting twist, gold's ability to act as a safe haven investment morphed as it joined the equities markets and commodities markets in today's global meltdown. Panic selling continued for the third day.
Beginning overseas last night, this selling then moved into the U.S. markets this morning. Although the underlying assumptions we have been basing our analysis and fundamental forecasts on have unfolded much as we anticipated, precious metals reacted 180° differently than we thought they would.
You cannot change a reflex. Proper pressure just below the knee will almost always result in a kick. Cause and effect will remain the same as it always has. This cannot be said for the way we have seen the precious markets react in the most recent weeks. There seems to be a new effect for the same cause. It is my belief that that will not continue. It is my contention that at some point the switch will be flipped back to the on position and gold's price will react as it normally does, that is, as a safe haven investment. When that return will take place remains the question.
As always, wishing you good trading.
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