Gold Stocks: Important Info to Know

[mick silver]

Reasons for Gold Stocks Being Liquidated:

Momentum players bailed out with zero understanding of company fundamentals such as reserve values and cash flow expectations.
The weak stock market affected the gold mining stocks.
Overleveraged hedge funds that had mining exposure had to sell everything in sight to meet margin requirements and redemption calls.
A major prime broker for hedge funds raised their in-house margin requirements on mining stocks from 50% to 100% "because they are so volatile". This caused forced selling and further weakness.
Non gold bug investors coming to the party late came in at the highs and then bought into the "deflation" argument and started selling.
Many confused players in the gold community who have never understood Hayek, Mises or Menger bought into the deflation argument and created more selling.
Reasons for the Dollar Strength
http://www.321gold.com/editorials/gerbino/gerbino111108.html

[mick silver]

Redemption notices to U.S. Hedge funds caused a huge flow into dollars. Hedge funds had sold dollars for years to buy foreign stocks. Making these purchases required selling dollars and buying the local currencies to buy stocks on these foreign stock exchanges. When these foreign markets blew up, hedge fund customers seeing horrible results wanted their money. Redemption requests followed. The funds had no choice but to sell the foreign stocks and with the proceeds buy U.S. dollars to redeem to their U.S. customers. This created a dollar demand that was significant but more importantly compressed into a short time frame ....................... So this is why the dollar made a big jump up