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przemyslaw-radomski

Would a stock market crash be followed by a decline in gold prices?

October 19, 2012, 12:00 PM Przemysław Radomski , CFA

One vocal analyst is loudly predicting a stock market crash quickly followed by a panic flight to the dollar (and a gold dive). Your thoughts on this would be much appreciated.

We would be happy to discuss the points for a major crash followed by a panic flight to the dollar. While stocks could decline, we doubt that they would take gold with them similar to what we saw in 2008. Markets saw very well that gold declined only temporarily and that it resumed the rally in the subsequent months. The next time that such a decline is seen, we might see a small decline in gold because markets will take into account gold's likely rebound. That is, of course, if gold doesn't need to correct at that moment due to an extremely overbought status.

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