-- Posted Friday, 10 October 2008 | Digg This Article | Source: GoldSeek.com

By: Peter Cooper

Gold prices hit $918 an ounce yesterday as the final hour of trading on Wall Street brought a bloodbath to an already strongly falling market.

The Dow Jones index fell 678.9 to 8579.2, its biggest percentage drop since Black Monday in October 1987 and its third biggest point decline in history. Gold and silver were both up more than three per cent in a matter of minutes to $918 and $12.2 an ounce respectively.

In a stupendous final hour of trading, the Dow fell more than 400 points. This followed a Standard & Poor’s downgrad for General Motors and shareholders were forced to sell off shares to meet margin calls.

The S&P 500 fell 75 points to 909 while the Nasdaq closed down 95 at 1645, its lowest level since August 2003. Trading volumes rocketed, sending volatility near to all time highs, as the Dow closed down 7.3 per cent. This came exactly one year after the index hit an all-time high on October 9th 2007.

What is happening is a classic unwinding of a leveraged stock market with margin calls triggering further sell-offs which then trigger further share sales to meet further margin calls. Once this becomes apparent stock holders throw in the towel and capitulate and the market finds a bottom.

Gold and silver are benefiting from a flight to safety, and also an increasing realization that inflation is sure to follow the multi trillion dollar bailout of the global banking system.

Peter Cooper, Arabian Money

-- Posted Friday, 10 October 2008 | Digg This Article | Source: GoldSeek.com

Previous Articles

© 1995 - 2019

Live GoldSeek Visitor Map | Disclaimer