Market panic; Trading halted

The S&P 500 is shaping up to have one of its 10 worst days in history.

Stocks opened down 7% this morning, triggering a “circuit breaker” that halted trading for 15 minutes to prevent panic selling.

Volatility is high across all assets. Gold touched a 7 year high, above $1700/oz, before retreating back down toward $1,670 per oz at time of writing.

And silver is down 3% at $16.83.

As Jeff Clark has shown, during a steep sell-off like today, all assets typically move lower together:

“You’ll recall that gold did fall in the initial shock of the 2008 financial crisis… But while the S&P continued to decline, gold rebounded and ended the year up 5.5 percent. Over the total 18-month stock market selloff, gold rose more than 25 percent. The lesson here is that, even if gold initially declines during a stock market collapse, one should not assume it’s down for the count. In fact, history says it might be a great buying opportunity.”

This correlation happens when investors move to cash, or as margin accounts are called.  And margin debt started this volatile month near record highs:

If you think gold and silver could move higher after today’s crash, and have underlying momentum for future appreciation, then consider stocking up while metal prices are soft with the overall sell-off.