Crashing Gold and Silver

By Howard Ruff | Oct 7 2011 2:35PM

A fortnight ago gold recorded its worst week since 1983. Skeptics are now questioning gold’s credentials as one of the few shelters from financial storms. Some investors have begun to worry about whether this is the end of gold’s spectacular surge.”

September was the worst month for gold since Lehman Brothers collapsed in October 2008.

How come? The banking crisis and the threat of government default should have been good for gold, right? Old habits die hard, so when the stock market began to crash, people fled to cash.

If you bought silver or gold in August, you were hurt in September. But you buy silver not only as an investment but also as insurance against inflation. You wouldn’t cancel your insurance policy in the middle of a hurricane, and you shouldn’t sell silver when it takes a tumble. Like any insurance, silver’s value will pay out over time, not day by day.

People buy gold either as an alternative to the dollar as a store of value or as blanket coverage against all the world’s ills.
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