Equities Hammered, But Gold Lower; That Can't Be Right
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Another Monday morning beatdown for equities is taking place. This has become almost a daily occurrence; markets get hammered early and spend the rest of the day trying to come back, leaving the bulls with hope. This is the same pattern that occurs over and over again when a market tops.
At the same time, gold is under pressure and threatening to break below the $1,280 level once again. Many think that the pressure in equities would be good for gold, which of course is wrong. Gold is not a hedge against equities; it’s a hard asset that is in trouble of breaking down.
I can hear the chants of the pundits and gold longs -- “that can’t be right”; how can gold continue to go lower? The answer is simple. The gold pattern suggests lower prices and market correlations are not absolute at the time they happen. If gold breaks through $1,280 on the downside, the odds increase of seeing $1,220-$1,240.