Dalradian Resources, Inc. DRLDF

Blindsided by a Black Swan

[R_J_]

Our portfolio contains five gold mining stocks.
On Monday these dropped an average of a whopping 4.3%
Why did this happen?
Here is an explanation.
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Louis James, Senior Metals Investment Strategist, Casey Research
Quote:

Greece voted “no.” Europe is in turmoil.
The US trade deficit is back up again.
Stocks are falling everywhere.
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So why is gold, the ultimate safe haven asset, dropping like a rock?
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As I write, gold is within kissing distance of breaking last year’s low, and silver already has.
On the face of it, precious metals should be way up at times like this.
Our friends at GATA would say that it’s obvious that governments are intervening to keep that from happening.
What else could it be?
It defies belief that recent news would cause large numbers of investors around the world to conclude that they no longer need the safety of owning gold.
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But there’s another major factor West-centric analysts may be missing: China’s stock market crash.
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China has pulled out the stops to prop up its stock market, but nothing has worked.
The crash is the biggest decline in over 20 years.
We’re looking at China’s equivalent of the fall of 2008 in the US.
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And that means that the world’s biggest gold buyers are suffering a major liquidity crunch.
Many won’t have the cash to buy anything, not even gold.
Worse, hundreds of Chinese stocks are halted and huge numbers of investors are facing margin calls.
That means that many who own gold will be selling because it’s the one thing they can get a bid on.
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When a large number of buyers are forced to become sellers… well, counterintuitive days like today can make sense.
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End Quote
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RJ