Monday, 7 September 2009

Weekly Wrap: Your source for stock, stock market, and stocks info

We started last week with a sell-off on Tuesday that the market retraced those losses by Friday. The payroll number came out at 216,000 people losing jobs. I sound like a broken record, but you can’t have a “recovery” when people are still losing jobs. We aren’t just losing a few thousand, we are losing jobs in the hundreds of thousands. In other news, retail sales for the month of August fell 2.3%. Apparently, it has been the smallest decline since Sept. ’08. A lot of the pundits think that because consumer spending was 70% of the economy in the boom times, that Americans are going to come out of their shells again and start spending like the good ole days. I believe this theory to be false. I think there has been a dramatic shift in the psyche of the American consumer. Their habits will not be towards profligacy but towards frugality. I showed a chart on my blog on March 10th titled “Seismic Shift” which showed personal consumption as a percentage of GDP. Everyone who pays attention to financial news knows that “in the past” the American consumer made up 70% of the U.S. economy. So, will that fact remain unaltered? I don’t think so, you are already seeing and will see more of a pullback in consumer demand for goods people really don’t need. What is interesting last week was the big move in gold? There is a lot of chatter about what is behind the move in gold. I don’t think the chatter really matters. Who cares? The point is gold is moving and do you have a plan? I am planning to put a significant portion of assets into gold at some point. I have been looking for almost a year for a correction in the yellow metal because of all the bullish pundits and newsletter writers who say that you must own gold because of the dollar collapse. I do believe there will be a currency crisis in the near future and those holding only dollars will lose substantial purchasing power (i.e. wealth). For now though, I want to see a pretty big correction, but gold just won’t go down. So, for all of you that believe news comes first then markets move. Explain to me why gold is moving when there really isn’t any news to support it. Let’s say gold takes off and goes up to $1600 an ounce or goes up and collapses to $600 an ounce, do you think you will be told the reason (from the mainstream media) before it actually happens? Definitely not, the reason for the move will only come AFTER gold makes its move. That is the reason why to actually “make money” you have to buy or sell something before other people catch on.

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