mining stocks have been counter trend the rally so far so fingers crossed... but early on liquididty will hit everything
CASH IS GREAT - In a deflationary event ALL asset classes decline - its the reset button Out of all the horses you want the one with wings - so when all the crashing is done Pegasus rises CASH IS WORST - In an Inflationary event all real assets rise In an inflationary even your mining companies cost of production will rise - so you hope that gold prices rises faster - and that is the probable case in a hyper inflation because billions of dollars needs BIG value - Gold has 5 things going for it - Liquid, High Value, Recognised, Concealable and Unreplicable Liquid - easy to buy and sell or trasfer High Value - can move big money Recognised - World Wide Known Concealable - You can hide it Unreplicable and Able to be divided into units (One big into many small) - Cant print it Diamonds are something that has one thing over gold - cant find with a metal detector Why not Property? Illiquide Regionally limited Questionable Value (unless farm land) Easy to Steal Control of
The question was what happens to mining stocks in a crash. In a true crash everything gets sold off regardless of industry as those who panic and want out of the stock market want out of all their stocks. Stocks that are not overly expensive may not crash as much and may recover faster, but during a panic it's sell now and ask questions later. Having said that, 2008 was not a crash - it was a slow, grinding, month after month of falling In such conditions, if gold was going up, gold mining shares may well go up rather than down 1987 was a crash
