A lot of analysts claim that the COVID outbreak will put global economies into recession and that we are at the beginning of a Crisis similar to the 2007/08 Subprime Crisis. Gold has been the standard of "Store of Value" and one of the biggest winners of 2019 as well as 2020 (thus far). If we are in a "Subprime like" crisis on stocks, what are the implications for a safe-haven like Gold?
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Looking at S&P's 1W chart we can find a relation (so far) as following the late-February/ early March 2020 crash, the market broke below the MA50 but recovered and is at the moment testing it as a Resistance. Similar to what happened in April 2008.
At the same time Gold had a disappointing March as it was sold off aggressively along with the stock crash. Contrary to S&P , it found support on its 1W MA50 and has been rebounding since (making also a new marginal High). Similar to what happened in April/ May 2008 (with the exception that it almost touched its High).
During the Subprime Crisis both S&P and Gold collapsed to new lows; S&P brutally erased the gains of +10 years while Gold even though it broke below its 1W MA50, it only marginally broke its 12-month lows.
So if history repeats itself and S&P tanks during the COVID crisis, will Gold break its 1W MA50 but respect its 12-month support? It will surely put its attribute as "safe haven" to test!
Do you agree that if the 2007/08 crisis is repeated Gold will pull back even by that much on an asset-wide liquidation event, or will firmly hold its 2019/2020 gains? Any other scenarios you want to discuss? Feel free to share your work and let me know in the comments section!
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This crisis is triple trouble, it's a medical death threat, but it put 15% of Americans out of work and shut down business and travel.
Later this year we will experience another mortgage crisis when the unemployed cannot pay for their homes. This takes longer to rollout.
The rally forms a Bearish Gartley now, see my analysis for 21 May projected top ~3K SPX. Ty for post!
Back in 2008, a time I clearly remember, I see on your charts how the S&P sold in May and went away, and that was a 2 week bump to gold, then it was their turn to sell off.
What you have published here, is what I've been gaming in my head and on my trackers, but could not articulate as you did here. Thank you!