Gold, Silver are going through a mini crash today

With almost 4% declines, Gold and Silver are going through a min crash in world markets. In India, on the MCX, Silver prices opened at 51778 and are currently at 49695, more than Rs 2000 decline, almost 4%. Same is the case with Gold.

Often, in the current environment,  a rally in share prices (risk ON) is accompanied by a fall in precious metal prices. The theory is that Gold and Silver are safe havens, therefore when traders are willing to take risk (buying equities), they ignore safe havens (Gold, SIlver).

With this theory, today’s decline may be attributed to increased appetite for risk. But, that is not always a valid theory.

Often, Equity and Precious Metals will fall together when investors are worried about all kinds of speculative risk. Then, there is a shift from all risk assets to risk free assets. That may be going on today. If so, it is not good news for equity investors.