Why Gold Fell With the Tech Stocks

Yesterday was a rough one for us. If you own anything like what we own, you saw red almost everywhere, including the gold and Bitcoin that are supposed to hold up on days like that.

But I've seen a lot worse. I bought my first Bitcoin in 2013, and it's been cut in half at least six times since then. Three of those drops were 75% or worse.

And just a year and a half ago, things were a lot scarier. On April 8, 2025, the S&P 500 closed almost 19% below its record high, and the VIX (the index Wall Street uses to measure fear) finished just over 52.

The VIX has closed that high on fewer than 1% of trading days since 1990, and before that April, the last time was COVID.

I put gold, silver and the miners on our buy list the next day.

Now compare that to yesterday, when the VIX closed at about 19, roughly where it's averaged over the long run.

AI Stocks Did 90% of the Damage

The selling started Wednesday night, when Meta reported earnings.

Revenue was up 26%, to about $64.6 billion. But the filing also showed Meta spent more on data centers and equipment than its business brought in, and it announced a new class of stock it could sell down the road to raise money.

Investors took that as a sign the AI spending spree is getting harder to pay for. Every chip stock in the Nasdaq-100 fell, and Nvidia alone lost about $235 billion, more than most companies in the S&P 500 are worth.

Oil piled on. The New York Times had reported overnight that the U.S. and Israel have drawn up plans to resume strikes on Iran after the November 3 midterms, and then a deadly attack hit an airport and an oil field in Saudi Arabia.

Brent crude, the global benchmark, jumped to about $113 a barrel, its highest since May.

So the Nasdaq fell 2.6%, its worst day since June, and the S&P 500 fell 1.2%.

But the Dow finished flat, and believe it or not, 49 of the Nasdaq-100's companies went up. By one count, 26 chip and AI names did about 90% of the damage.

That's why, to me, yesterday's selloff was an overreaction. A real panic doesn't leave nearly half the Nasdaq-100 in the green.

Gold Fell 12% in the COVID Crash, Then Set a Record

Gold was the hardest part of the day to explain.

It fell for a fifth straight session, and silver dropped about 5% at its worst. That happened on a day when the 10-year Treasury yield had its biggest one-day drop since March 2023, the week Silicon Valley Bank failed.

Normally, that's good news for gold. It doesn't pay interest, so when bonds pay less, holding gold costs you less.

So the textbook answer doesn't fit here. When people get scared, they sell what they can, and gold's about as easy to sell as it gets.

I watched gold do the same thing in 2020.

In late February that year, it traded around $1,680 an ounce, and by March 17, with COVID shutting the world down, it was down to about $1,470.

Investors were hoarding cash and dumping everything from stocks to gold to meet margin calls (that's when your broker demands more cash because a bet made with borrowed money went against you).

Less than five months later, gold set a record at $2,067.

I Bought Gold Near $1,800. Two Years Later, It Was $1,618.

I bought a lot of gold on May 11, 2020, about two months after that March low. Gold closed around $1,800 that day, and about three months later, it hit a record high.

Over the next two years, it gave back every bit of that gain. On September 28, 2022, gold traded at $1,618, below what I paid, and it didn't top that 2020 record until the end of 2023, more than three years after it was set.

I didn't sell a single ounce, and as I write this, gold's around $4,000. Five straight down days haven't changed why I own it.

Holding gold in the 1970s wasn't for the faint of heart either. Right in the middle of the biggest gold bull market of the last century, it fell about 47%, from around $195 an ounce in December 1974 to about $103 in August 1976. By January 1980, it hit $850, more than eight times that low.

Of course, none of that guarantees a repeat.

Down More Than Half, and Still Up Nearly 80%

Take silver. It's down more than half from its January peak, but it's still up nearly 80% from April 9, 2025, the day I put it on our list. Gold's about 27% off its January high, and still about 30% above where it was back then.

So how bad this feels really comes down to timing.

If you bought near the January top, you're sitting on a real loss, and I won't pretend otherwise. Drops like that are the whole reason we size every pick at 1% to 2% of the money you've set aside for speculative ideas.

Our 29 open positions range from one down about 76% to one up about 239%, and the same process picked both.

Nine are up more than 50%, and four, all small metals companies, have lost more than half their value. At our sizing, even the worst one has cost no more than about 1.5% of that speculative money.

And when a position doubles, we sell half and pull our original money back out. We call that a Moonshot Ride. Six of our open positions have had one, so whatever they do from here, they're riding on house money.

By the way, every pick we made during that April 2025 crash has either closed for a gain or is still green, even after yesterday.

What I'm Watching Into November

Here's what I'll be keeping an eye on over the next couple of weeks, along with what I expect to see.

• October 28, the Fed. It raised rates in September for the first time this cycle, and after the selloff, traders mostly stopped betting on another hike this month. My guess is it holds, and I'll be listening for what it says about oil.

• October 28 and 29, Microsoft and Amazon. I want to see whether their AI spending is outrunning the cash their businesses bring in, the way Meta's did.

• November 3, the midterms. The President hasn't approved the strike plans, and he's called off plans like these more than once this year. I'd expect oil to swing on every headline until the vote.

• Gold. Personally, this is the one I care about most. If the selling was about raising cash, it should ease as the fear does.

Two Questions Before You Do Anything

J.P. Morgan Asset Management looked at what happened to $10,000 put in the S&P 500 at the start of 2005. By the end of 2024, it had grown to about $71,750. Miss just the 10 best days in those 20 years, and you'd have ended up with about $32,900. And seven of those 10 best days came within two weeks of the 10 worst.

So after a day like yesterday, ask yourself two questions about everything you own:

1. Has anything changed about why I bought it?

2. Is it small enough that another rough day won't rattle me?

If the answers are no and yes, you don't need to do a thing.

If the second answer is no, the position's too big for you. If it were me, I'd fix that on a calmer day. And if your reason for owning something has changed, that's worth a fresh look no matter what the market's doing.

Anyway, if this week left you with a question I didn't get to, just hit reply.

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If you didn't like one of those answers, the next question is what to change. That's the part I save for Premium Members, along with exactly what we own and what we do about it.

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