mReits getting double hammered today, MLP's only getting half hammered so far, but GOLD is getting hit the worst down 9%.
I thought gold was supposed to be a hedge in cases like this. I mean, the rationale behind the selling is fear of more debt and dilution. Or is it just all superstition?
In that case, the salivation over jan calls is soon to begin.
Be careful, the FED policy response is to push interest rates lower on the long end and raise interest rates on the short end. Their goal is to kill the yield spread. This policy is like kryptonite, the longer it goes, the worse the victim will get. These guys did this in 1972 and 1973 and the Mortgage REIT business Associated Mortgage Investors and Atico Mortgage Investors (of Miami) were killed, down to zero or off 90-95%. I was surprised to see this hover around $36 after helicopter BEN announced quantitative easing until infinity, until infinity I think means when the Mortgage REIT's go to zero. High yield investments are high risk, especially when they involve high leverage.
Sentiment: Strong Sell
looks like today's bottom at about noon eastern. Dow moved from -2.4% up to -2.2%. Both DOW and Nasdaq have been tracking equal percentages. Also notice the shakeout dip that occured at the same time in about 15% of all equities?
Gold hasn't been a hedge for decades. A quick look at the charts shows that. The number of times it bucks the S&P is a lot smaller than the number of times it tracks or leads it.
Are you kidding me? Gold may be slow now, but decades? I bought 16 ounces (1 lb.) in 2000, 12 years ago, for a cost basis right on $275/oz., 4400 for the total and threw it into the safety deposit box. At 1700/oz. that 4400 dollar value is now over 27,000. An average of about 50% per year.
From Wikipedia: "Investors generally buy gold as a hedge or harbor against economic, political, or social fiat currency crises (including investment market declines, burgeoning national debt, currency failure, inflation, war and social unrest)."
That is exactly why I bought it. Things we seem to not be able to stop for very long --- inflation, war, and financial disruptions.