It is ages since I gave up my subscription to Money Week and its sister publication the Fleet Street Letter - far too right wing for my taste and they both thrive on spreading gloom, doom and fear. Money Morning, Money Week's daily update opened with these words:
"They say that bull markets end with a bang, not with a whimper.
We got our bang. The problem is, it was in the wrong direction. In just two days, the gold price fell by more than $200, from $1,560 an ounce to an intra-day low of somewhere near $1,330."
"It's estimated that some 400 tonnes of gold - almost 13 million ounces - were sold on Friday alone. That's about $20bn worth.Well that is indeed amazing. But the article continues with no coherent explanation. And without explanation we have to conclude that something very fishy has happened. If it happened in gold it could happen in stocks, it could happen anywhere. I still stick with my belief that it was forced sales by holders who have been driven out of their positions by margin calls.
To put that in some kind of perspective, that is more than the entire holdings of the Bank of England, which are just shy of 10 million ounces. (Even after the debacle of the sales under Gordon Brown, we are the world's 18th largest holder). It's more than the holdings of Spain, Austria, Saudi Arabia, Portugal or Turkey.
Of course, most of the gold sold on Friday was in derivative or paper form, and the same ounces may have been bought and sold many times over throughout the day, but the numbers are still extraordinary."
So even though the DOW is still hanging in there, just, I feel more comfortable sitting on cash (portfolio now 95% cash).