What comes next is the big issue for gold bugs. Will a second major stock market sell-off revisit the lows of March 2009 and the autumn of 2008? If so, will that drag gold down as a part of a general sell-off with everything up for sale to meet margin calls?In other words, will a panicked scramble for liquidity leave gold reeling like it's '08? He seemingly thinks it will:
One thing that can be fairly certain is that in relative terms gold will outperform most other major asset classes, but whether that will include cash in dollars or short-dated treasuries is perhaps unlikely.
In a sense, his call is an easy one to make. A liquidity squeeze pretty much drives down all asset classes, except for those that directly benefit from the flight to liquidity. There's just one question that comes to mind: if gold is to plummet, from what level?