As the hours tick down to Monday’s Wall Street opening, investors are left wondering where to go when the proverbial sky seems to be falling. Since the S&P downgraded the US sovereign debt world stocks have plummeted. Middle Eastern markets tumbled as much as 7% yesterday and Asian markets fell over 3 percent. Both European and US stocks point to a considerably lower open and as London has shown the opening fall maybe drastic.
Not Just the Downgrade
The confusion about the global sell off has been exacerbated by the perception that the S&P downgrade is the cause of all of this mess. Yet, that is obscuring the reality. The S&P downgrade was just the reflection of the problems that have persisted since 2008 and have not been fixed. These problems center around debt. The markets have been inflated since 2008-2009 simply due to the fact that the US and Western Europe were able pump money into the system to keep it a float and now there seem to be no bullets left to tackle this immense problem. The global recession never went anywhere and in many ways is getting worse as manufacturing has stalled, joblessness has risen, and a belief that politicians around the world and especially in America do not have the where with all to solve the problems on hand.
Currency Investments Not Reliable
Many investors are seeking safer havens as world stock prices contract. Some have found it in the Swiss Franc or even the Australian or New Zealand Dollar. Yet for are the lure these currencies seem to have in the immediate term, they can fall quickly has those governments seeking to stabilize their export market intervene in their currencies. When this happens any gains can become losses over night. Without sounding pessimistic, gold and silver remain safe and will continue to do so until the crisis abates. Of course when it co0mes to gold the best investment would have been to buy it long ago.
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