I was playing with the correlation of SPX vs EUR vs , specifically I was interested in the reaction of the market to the dollar and Gold in the times of the crisis.
What I discovered was that in 2008 both EUR and Gold declined till the very end of wave 3 of the sell-off in SPX .
That means that till almost the very end of the panic Gold was not viewed as a protective asset, but the Dollar was.
In the light of the forthcoming SPX sell-off I think the scenario will repeat itself, as nothing really changed in the relative perception of those two assets (It's actually worse for Gold these days: speculators hate it).
What this will mean for us is that when SPX starts declining (it will!) a massive decline in Gold will happen during the first part of the crisis, combined with the strengthening of the dollar. Then both may reverse.
In that light I am updating the wave count for Gold , which I will publish shortly.
In times of a larger economical uncertainly, gold will be a better protective asset than Dollar. 2008 collapse largely solved by swift action by US government to bailout...
In my opinion even if SPX does start dumping now, it'll only affect gold in the short term but not the larger trend which is a secular bull market right now.
I expect another leg of a zigzag to be completed in SPX next week, reaching 2150 and then the show is off. Same timing for other instruments. I may be insane to expect a Crude rally with SPX sell-off, but it has more correlation with the dollar than with SPX.