today the price of gold was up $27.50, but mining stocks sold off with the general market. with the dow down 777 points, precious metals stocks behaved like stocks instead of precious metals. their prices are being driven by fear, not greed. mining stocks are priced as though we are heading for a deflationary depression. i do not think that will occur because the powers that be are doing everything they can to reflate the economy. if they were willing to endure an economic slowdown, they would have done so by now.

the markets declined sharply because the house of representatives did not pass the wall street bailout bill, and rightfully so. this bill gave herr paulson near-dictatorial powers with no judicial review. i believe another bailout bill will be enacted to prop the markets up until at least the election. if you are still invested in the broad market when it bounces back up, i highly recommend you avail yourself of the opportunity to run for the exit.

again, cash is safe, gold and silver are taking on the aspects of currencies, and financially strong mining companies will provide leverage to increases in the price of silver and gold. when the broad market finally gives up the ghost, i expect investors will turn to companies that have real assets and real balance sheets, unlike just about all of the financial companies.