So a few people have asked why gold didn't rally in the stocks "correction" this week.
1/
1/
Some have even asked if gold is still a haven at all.
2/
2/
But this kinda misses the point about how gold acts in a crash.
3/
3/
When equities tumble sharply, as they did this week, a lot of havens can initially feel pain.
Gold, bonds, the swiss franc and the yen are all susceptible.
4/
Gold, bonds, the swiss franc and the yen are all susceptible.
4/
That's because during the acute phase of the selloff, investors need liquidity. They need to answer their margin calls.
5/
5/
At such an early stage of a major correction, investors don't need safety, they need CASH.
6/
6/
This is clearly illustrated by what happened in ETFs, selling off as the S&P dropped from Friday.
7/
7/
As Commerzbank said:
``ETF investors are probably selling gold to offset their losses on the stock markets,'' analysts at Commerzbank, including Eugen Weinberg said in a note.
8/
``ETF investors are probably selling gold to offset their losses on the stock markets,'' analysts at Commerzbank, including Eugen Weinberg said in a note.
8/
The same exact thing happened in 2008.
9/
9/
But what makes gold a haven, is that it falls LESS than other assets, and it starts recovering as soon as the acute phase is over. During this phase, investors are less in need of cash than in need of a place to park cash.
That's when gold does well.
/ENDS
That's when gold does well.
/ENDS
I think this chart illustrates the point better. 
