Many gold bugs are wondering why precious metals are crashing in the middle of the market mayhem. Aren’t gold and silver supposed to be safe-haven assets that protect you from the meltdowns?
This should satisfy your curiosity: The world has been hit with $12 trillion margin calls.
When margin calls happen, traders will liquidate their assets. Typically, investors will start selling their metal holdings to go back into their greenback stocks. Bullion, exchange-traded funds, metal stocks – if it is yellow, it is being sold.
In the United States, margin debt stands at around $600 billion. Investors are trading borrowed money, and with interest rates now at zero, you are going to witness even more traders trade on the margin.
Who knows how low this market can go? You are going to witness even more panic selling, and potentially even panic buying, in the days to come. But with trillions being pumped into the system, you are going to see massive price inflation in the future.
Metals are trading at tremendous levels, so perhaps now is the time to buy the dip.
And pray!
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