Friday, November 25, 2011

Basic trading strategy in a panic

There's an old saying in a panic don't sell what you want, sell what you can!  So when the solid hit the wall sometime in the next few days/weeks -- either Germany and France take a long walk and decide to dump the Euro, or the PIIGS decide that although separation will be painful, it's better than their current situation.  Either way, high quality liquid assets will fall in price, as those who need liquidity will sell assets they can (especially if they don't have to take a hair cut).  Gold and other metals that have often been bought at much lower prices will be liquidated.

I would not be especially surprised if gold didn't hit the 1,500 level before Christmas -- it will go up afterwards as those with wealth will try to protect themselves.

Fun times


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