Daily Investment Interpretations
October 12, 2008
One reason advanced for Friday's fall in the on-paper price of gold is that
various organizations were selling their gold futures to raise cash. The price
of gold for actual delivery rose to $903+ an ounce on Friday night.
The two articles below contain discussions vis-à-vis what's happening at the present time.
Exploring the worst-case scenario
Understanding the Market Panic
Should We Do Tomorrow?
For most of us, probably nothing. The stock market has been so unprecedentedly volatile that it probably makes sense to simply wait a little to see what's coming next. There's an international effort on track to rescue the global economies. We'll have to see how the markets respond to this in the morning. (One article, The Fed's Next Options, isn't very optimistic, but this may be more about investor psychology than anything else. With the world's governments taking dramatic steps to support financial institutions, the markets could turn at any time. And if not, the thundering herd may simply have to wear itself out.) Personally, I could imagine that the world's governments, acting in unison, should be able to rescue the world's real economies. But we'll see.
Later (8:00 p. m.):
Asian stocks are up significantly in early trading, by 1.5% in New Zealand to 5.8% in Australia, and U. S. market futures are also up (25 points for the S&P 500). Still, one lesson I've learned is to tread cautiously, buying or selling a little at a time. Even if the market turns up tomorrow and stays up for a while, economic conditions are going to get worse before they get better. The stock market generally bottoms four to six months before the economy hits bottom.