The stock market for the past 3 days have been very disappointing. During the end of August and for some time in September, we though the Global Economy was recovering. I had great faith in the economy and its recovery. I was aware of all the issues in Europe regarding Greece and its Default crisis but nonetheless, I thought they would get things solved by now. But not much has happened and over the past few days, one of the biggest economic leaders, China, showed slow in its economic Growth as well. Everyone excepted at least China to do a lot better than the rest of the world but it doesn’t seem to be the case.
So are we doomed?
I don’t think we are, not yet at least. Although the global economy experienced a huge setback dropping almost 400 points yesterday (Dow Jones Industrial Average), and about 4% everywhere else, we are still hanging in. We are still in better shape than a few years ago when the Dow Jones was a few thousand points lower than it currently is now. And unlike a few years ago (2008), the plummet we experienced yesterday didn’t carry over to today. We did see gains today, but they were minimal.
The Dow Jones gained just 37 points which really isn’t anything compared to the drop it experienced on Wednesday and Thursday. The NASDAQ Composite gained just 27.5 Points. The S&P 500 gained less than 7 points. And the NYSE gained 44 points.
I know we were aiming for that 12,000 mark with the Dow but it’s currently sitting at 10,771. We were just a few hundred points away and now we’re well over a 1000 points from our goal. But I still think it can happen.
Investors are worried all over the world that things may be collapsing soon. So they are mass selling their assets in order to maximize profits or minimize losses. The stock market is very volatile now. It dropped about 500 points in two days very easily, although it didn’t bounce back today, I think it will soon because this is a great time for investors to buy low.
So why don’t I think that the economy is doomed? (Not yet at least). Because I’m looking at Gold. Generally in times of crisis like this with huge sell offs, the price of commodities like Gold and Silver tend to see massive gains but over the past few days, they have been going down. It shows us that investors aren’t putting their money in Gold which happens to be the best thing to invest in because the price always seems to be dependable. Of course they could just be selling and buying something else to store, but what?
I last reported about gold in the article I wrote after About the Stock Market After the Labor Day Weekend. It was almost three weeks ago. We would expect the price of gold to keep going up after what we have seen the stock markets do over the past week or so, but nope. I last reported the price of gold to be $1,877 an ounce. It was very expensive, near its record high of just over $1,900. But over the past few days, gold has been dropping. The Gold Bubble could be collapsing or it could be something altogether. Currently gold costs $1,642 an ounce. That’s $235 less than what it was just three weeks ago.
So what does this mean?
It could mean a few things. First, the economy is actually recovering and investors (as well as consumers) are just overreacting. If this is the case, we can expect Greece to get out of its crisis soon and we will see rallies again.
It could also be the Federal Reserve’s plan to pump $400 billion into the economy and people are trying to invest something on that end instead of Gold. Which may be weird but I’m not complaining. Lower prices just mean I can buy my mother gold jewelry at a cheaper price.
Today ended the market week. It wasn’t a very happy ending, but at least it wasn’t sad like yesterday. Don’t lose hope. As I always say, a positive mentality can go a long way. We have seen some of it in the past when we all thought Greece was out of trouble or when we believed that President Obama’s stimulus plan was a great idea and that it would help. Nothing in reality has changed, those ideas are still there, but the mentality just changed. If we can shift it back towards the positive (the entire global economy that is), I’m sure we can turn things out.
What do you think about this week in trading? And what do you think may be going on with Gold dropping along with everything else?