Gold and silver again prove a port in a stock market storm

Gold and silver prices jumped 2.6 and 2.7 per cent respectively as global stock markets closed the week with a big sell-off after news that the US economy failed to create any new jobs last month.

Gold is again closing on its August 23rd high of $1,911, so much for the end of the gold bull market, and silver is setting itself up for a run up against its April high of almost $50.

Gold and silver beat stocks

The answer to those who wondered if precious metals can rise against the direction of falling stock markets appears to be yes but it still looks a bit premature to buy the stock of gold and silver producers as the physical metals are outperforming.

Interestingly the US dollar also rallied yesterday as stocks sold off sharply. It is more usually inversely correlated with precious metals but as equities are sold that automatically boosts demand for dollars as they are turned into cash.

It is hard to see where the good news is going to come from to cheer markets up again. August has been a lousy month for stocks, though absent the climatic sell-off that would signal a bottom to the rout.

Presumably this is what we have to look forward to in September and October. The ArabianMoney short ETF portfolio has performed very well in this environment and that should continue for our newsletter subscribers.

Crisis coming?

But it will most likely be down to the eurozone banking crisis to call the shots in this downturn. The big question is whether it will get rough enough to really panic investors.

However, the direction is clearly down and that ought to be enough to guide investment decisions this autumn. There would seem little point in staying long in stocks, and we still see the most vulnerability in financials and emerging markets.

Meanwhile, ArabianMoney editor and publisher Peter Cooper discovered that all is not well in the Dubai Mall Gold Souk on a recent visit, click here for the video.