TJ...
Almost impossible to answer that one - I guess it would depend on how big a hairball it threw up and how fast it happened. I do not have a lot of fear of a repeat of 1987 here, even spread out over a little longer period of time. While I can no longer rule such an event out (due to the overall situation and valuations) you have to remember that that is exactly what the PPT was originally set up to prevent and even if AG were to lose control of the market overall, I think he could still stop a complete meltdown.
So - assuming the selloff was orderly (AG should be able to do that) I think gold stocks would go higher, especially if part of the problem was seen to be inflation or stagflation where the $USD would be hit rather hard. If the problem were to be deflation (I still think that is quite possible) the strength of gold and gold stocks would be because it was seen as a safe haven from economic and financial dislocation and would be slower unless the scare appeared immanent.
Overall, I see gold going higher on any scenario other than a crash, when everything goes down for a brief period, but even then I would expect a rapid recovery for gold and the stocks.
Just a guess though.
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