Monday, November 29, 2010

Are Gold and Stocks moving in opposite direction always?

Historically, Gold and Silver is moving against the direction of Stock Market.  Around 1929 when US was in recession, the Stock Markets have seen a big correction. The Dow which was trading around 380 levels came crashing to 40 with in a span of 40.

The Big correction is followed by 15 years of consolidation. At that period, Gold was started moving up. As Investors find Gold and Silver as safe investments, they started investing in gold at that time.

When ever Stock Market crashes, pessimism  prevails everywhere. The pessimism towards Stock Market drives the investors to a safe investment avenue. This is why historically Gold rallies when there is a bear market.

But the recent trend is Gold shows this trend is not applicable now. Since 2003, Gold and Silver are moving up. At the same time Stocks are also moving up. The price pattern in charts of stocks resembles the price pattern of Gold and silver. How long they are going to move simultaneously, we have to wait and see.

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