by Steve St. Angelo, SRSRocco Report:
To the surprise of many investors, the precious metals have rallied while the broader markets continue to sell-off. Currently, both gold and silver are solidly in the green while the major indexes were all the red following a huge sell-off yesterday. The Dow Jones Index has lost nearly 1,000 points in the past two days while the gold price is up nearly $25.
However, even though we could see a late-day rally in the markets, and even higher stock indexes over the next few months, the bear market for stocks is still coming. The Dow Jones Index has now suffered two large sell-offs in the past ten months:
In January, the Dow Jones Index fell by more 3,000 points, and the current correction is only one-half of that amount. So, I expect to see a continued correction over the next month. Because October is the worst month for market Crashes, this could be one hell of a blow for not only the economy but also, for investor confidence.
For example, according to the Zerohedge article, Used-Car Prices Plunge Most In 15 Years:
Looking deeper at the core inflation print, it reflected a 3% monthly drop in prices for used cars and trucks following increases in each of the last 3 months, and the biggest drop in 15 years…
And then, of course, the continued disintegration of the U.S. Retail Market, Sears Creditors Push For Bankruptcy Liquidation As Vendors No Longer Paid:
Amid recent reports that Sears is set to file for bankruptcy as soon as this weekend ahead of a $134 million debt payment due on Monday, the only question is whether the filing will be a Chapter 11 debt for equity reorganization or a Chapter 7 liquidation. And contrary to the desires of Sears CEO and biggest creditor, Eddie Lampert, who would like to preserve the core business, others are pushing for an outright liquidation.
According to the WSJ, a group of Sears’ biggest lenders, including Bank of America Corp., Wells Fargo & Co. and Citigroup Inc., are pushing for the company to liquidate its assets under a chapter 7 bankruptcy filing, as opposed to reorganizing the business under chapter 11, this person said.
Interestingly, Sear’s major lending institutions (Blank of American, Wells Far-gone & CitiCorpse) are pushing for a complete bankruptcy liquidation rather than a reorganization. I gather they believe the “brick and mortar” retail industry is likely heading for the dustbin as the Amazon’s of the world takeover. I can assure you that “Amazon Economy” won’t last for much longer especially when the U.S. economy and shale oil industry collapse.
Don’t Expect The Precious Metals To Sell-off With The Markets
As I mentioned in several articles and videos, the precious metals will likely RALLY during the major market correction. And we are seeing evidence of that today. Gold is up over $20 and Silver, $0.23:
When I did this chart, the Dow Jones Index was only down 100 points but is now down more than 200. So, why aren’t the precious metals selling off with the broader markets as they did in 2008? The reason for the rally in gold and silver is because the precious metals have continued to trend lower over the past six years while the broader markets climbed higher. Thus, they have already “SOLD-OFF.”
Now, I am not saying that gold and silver can’t spike lower, but according to market sentiment and the COT Report, the precious metals are closer to a LOW while the broader markets are still trader near their HIGHS… even with the last two-day correction.
Once the major stock indexes head into a sustained bear market, you can count on investors “ROTATING” out of stocks and real estate and into the precious metals and the gold and silver miners. I expect the precious metals and miners to be one of the HOTTEST in the entire market during this time.