A Tale Of Two Asset Classes: Gold Miners Soar, Banks Crash

Submitted by John Rubino via DollarCollapse.com,

The following tables illustrate one of the dilemmas of mainstream money management:

The vast majority of financial advisers and portfolio managers are big fans of bank stocks because finance is, in their minds, a crucial if not the crucial form of wealth-creating activity in the modern world. So the big names in the field — Goldman Sachs, Deutsche Bank, JP Morgan, etc. — are generally seen as safe places to put client capital.

 

Finance stocks June 16

 

Gold and silver, in contrast are fringe, primitive, atavistic concepts that are, at best, “insurance” against some kind of 100-year flood that can’t be predicted and probably won’t happen.

 

Precious metals miners June 16

 

But some clients still like such things so what the hell, we’ll allocate 1% of the idiots’ money to it to shut them up. (1% is literally the proportion of global capital invested in precious metals.)

Unfortunately, that’s credit bubble thinking. Banks are dominant forces in an economy only when that economy is creating an unhealthy amount of credit. When the process exhausts itself the banks tank, and terrified capital flows back into “primitive” safe havens. Like Friday:

 

Gold is extending its rally in early trading – now the biggest 2-day surge since March 2009…

 

via http://ift.tt/28Xiyfl Tyler Durden

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