Stocks Down, Gold Up!
As September was winding down, we warned you about the risk of a coming sell-off in stocks, the seasonal danger known as the October Effect: “We believe the stock market is being floated on Fed policy and not on economic reality. Indeed, the level of corporate debt is so high that there is a real risk of a prairie fire of defaults and bankruptcies sweeping corporate America in the event of an economic downturn.”
As it happened, October blew in like a bear for stocks! On Tuesday, October 1, the Dow Industrials lost 343 points on news of the economy contracting.
As we write this in the middle of the trading day on Wednesday, October 2, the Dow continues to plummet, down another 558 points! [Update: The Dow closed down 494.42 points on 10/2]
Gold and silver are up.
We don’t read tea leaves or crystal balls, but we do look closely at the economic fundamentals and what is going on behind the scenes in the markets. Here’s an example of the sort of thing that goes into our assessments, Corporate Kingpins Are Dumping Stocks: “Executives across the United States are shedding stock in their own companies at the fastest pace in two decades, amid concerns that the long bull market in equities is reaching its final stages.”
“Corporate insiders — typically CEOs, chief financial officers and board members — sold a combined $19 billion of stock in their companies through to mid-September, according to data from Smart Insider, a U.K.-based group.”
“That puts them on track to hit about $26 billion for the year, which would mark the most active year since 2000. That year executives sold $37 billion of stock amid the giddy highs of the dot-com bubble.”
We’re not going to load this commentary down with a raft of numbers that would leave your head swimming, but you should know that consumer spending growth is weak, weak, weak, as are exports and other revealing components of the economy.
Our advice today is exactly the same it was last week when we wrote, “We have made the case repeatedly and the evidence confirms that we are in a long-term gold bull market. Because markets never move in a straight line, we advise our friends and clients to use any price corrections or pullbacks to add to their portfolios.”
Gold and silver are below their September highs, but showing great strength in the face of trouble in the stock markets. This is evidence that the smart money is moving out of stock danger and into the safety of gold.
We recommend you do the same at once! Speak with your RME Gold professional today!