Global Economies, Equities, Currencies and Gold Markets on Edge!
I know for many of us...news seems to be nothing more than presentation of a gathering of all the negative information available to fill twenty minutes of a thirty minute time slot. Stories of intense individual crisis from around the world in addition to global economic and environmental crisis is more than we were meant to handle in my opinion. It is like the media's goal it to help us pretend to be all knowing - Omniscient. God did not intend for His people to be constantly bombarded with one negative fact after another covering all corners of the world. Remember what the Apostle Paul wrote in Philippians 4:8, "Finally brothers, whatever is true, whatever is noble, whatever is right, whatever is pure, whatever is lovely, whatever is admirable - if anything is excellent or praiseworthy-think on such things." This should be our guide; but in today's world - is that even possible?
Not if you are focused on the current economies of the world... especially western economies. About the only good news is that the near crisis we are watching every day is affecting change - the great de-leveraging of overleveraged economies around the world. It was inevitable. Aside from this, there was/is little 'truth' in today's economies. They have been built on overextended promises by people who never intended to be held accountable.
Global Equities on Edge
The DOW Jones Industrial Average and other markets have seen sudden and dramatic decline over the last few weeks. I wrote about this in earlier articles many months ago. It is like everyone is sitting nervously at their computers with their finger right above the send button on nothing but "sell' orders. For over four months, the markets have been trying to go higher...but they want to go lower. Can you feel it? A sense of foreboding...like something bad is going to happen and it could be quick and severe. We have seen it before. We are treading on thin ice.
With the near record stock market recovery of the last year, you would think everyone would be happy. What is happening is that even those who understand little know that most every economic indicator available points to broad based problems. I could list them for you if I wanted to add to the laundry list of pain...stock valuations, unemployment, residential real estate, commercial real estate, bank failures, government bailouts of companies and recently other countries....but the biggest, most worrisome of them all - global government deficit spending. And the point I need you to understand? Your intuition is correct if you are feeling uncomfortable. Is there any other proof? Yes there is. The price of Gold and other precious metals.
Gold Markets on Edge?
Stock market recoveries are not paralleled by increases in the price of Gold. They almost always move in opposites. If there ever was a reason to worry about the state of global economics in my opinion, it can be summarized by the continued rise in the price of gold even as equities markets went up. Why?
There are more gold buyers than there are sellers. I am not just referring to individuals either, although this is true. I recently read an account where the travelers were in retail shops in China and there are floors where retail gold of all types are sold to the public....gold bars and gold coins specifically, and it was wall to wall, elbow to elbow people, and they were not just looking - they were buying.
China on Edge?
The new found wealth in China is scared. They are one of the few economies that seem to have everything going for it, yet these folks are trusting little of it...they want hard assets...real estate and gold. And since real estate has doubled in one year, they want gold. If you are a would-be gold buyer, you are competing with these folks.
But they are not alone. Central Banks and other countries have switched from long time net sellers of gold to buyers over the last two years. If I had to ask that you focus on just one thing, it would be this fact. These same institutions have been telling everyone for years that gold is not money, it is a relic left over from the old days when all currencies were tied to gold...the gold standard. Yet when the International Monetary Fund announced their plan to sell gold to generate some cash for struggling countries months ago, there was a line of would be buyers ready to take all they could sell. They eventually sold 200 tons to India - China wasn't happy. They did all they could to secure that gold. China is the largest producer of gold on Earth and yet they are looking to buy all they can find.
Fiat Currencies on Edge!
I answered this in other articles...why do all these governments and banks want gold? Back-up my friend. The same reason you should be taking the time right now to become proficient in these markets. There is still time - but not much.
You need to be careful. Trust me, I know; the precious metals markets can be very unforgiving. I am 100% convinced you need to be in them. You need to own gold. However, not just any gold, at any price...get educated by knowledgeable, un-biased, experienced people with only your interest at heart to be your guide. Find advocates.
For me, taking positive action in the middle of all the economic pain allows me some freedom to focus on the positive. As the Paul suggests...doing this is an active endeavor. It is work. It is not a passive act. Remembering that there is much that is more important than all of this also helps. During challenging times, it is a good idea to re-set your priorities on a macro level. For many, God, family, other people, health...so much more rank above the problems of today. But God did give us all a mind and I believe He expects us to use it.
I want to close with a final request. Print out this article and stick it away for a year. In one year, take it out and read it. If you took my advice and became educated and finally bought precious metals for the right price for the right reasons...well, a thank you email or card will be sufficient.
Insanity = doing the same things over and over expecting different results!
Steve Peters brings over 24 years of business, financial markets and gold broker experience to help new or unsure gold buyers avoid the mistakes so many make. Go here to read more: Best Gold Guide Ever Written.
More detail on current economic conditions can be found here as well: Economic Analysis.