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Precious metals are a safe haven in times of a bad economy. If people trust the economy will be OK, they will abandon gold for stocks because stocks outperform gold in the long run. If people think the economy is gonna tank, they will abandon stocks for gold because in bad economic times gold outperforms stocks.

What we are seeing now is the eternal fight between bulls and bears. On days that the bears are winning stocks go down and gold goes up. On days that the bulls are winning the exact opposite happens. Hence the gold price is no more than the accumulated perception of the state of the economy. Considering gold is still near $1,000 that perception isn't too good.

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