Stocks Tank And Gold Jumps: A Glimpse Of The Future?

December 4, 2021

Conventional wisdom holds that stocks and gold are inversely correlated, which is to say they move in opposite (or at least unrelated) directions because they serve different purposes in a typical portfolio. Stocks are for capital gains in good times, gold is for protection in bad times.

It doesn't always work out that way, largely because of the distortions created by corrupt/incompetent governments and central banks mucking around in places that used to be none of their business. As the saying goes: there are no markets anymore, there are only manipulations.

But manipulations only work for a while. Eventually, fundamentals and common sense win out, even in the face of unlimited printing presses and trillion-dollar deficits. And when that time comes, it will look a lot like today, with stocks - especially Big Tech - plunging.

and precious metals rising.

So is this the beginning of a return to financial sanity? There's no way to know, since the world's central banks still have a lot of ways to fool the credulous. But even if today's action is short-lived, it's nice to see a rational portfolio (i.e., long precious metals, short tech stocks) get up and stretch its legs.

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A one-ounce gold nugget is rarer than a five-carat diamond.
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