Could an implosion of the bond market take gold, silver and mining stocks substantially lower? If not, what would actually happen to precious metals? I still remember gold going down in 2008 despite being a safe haven.
Let's begin with an approximate definition of a bond. It's a paper promise of A to pay B a given amount of paper money. With the bond markets falling apart, the trust in the paper (fiat) dollars (and other currencies as well) would deteriorate. Where would people turn to in times of such a dramatic events? Especially, with no bonds to be considered as a "safe haven"? Most likely this would be to the place they have always turned to throughout the history in case of financial turmoil - precious metals. Consequently, we would not be afraid of this type of financial meltdown to hurt metals in the meaningful way. Still, as mentioned last week - we strongly suggest owning the physical metal instead of "unallocated, pooled" etc. gold.
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