In these uncertain financial times, governments and financial institutions across the world are snatching up US short-term T-bills, or treasury bills, to safely store their capital. Many large institutions consider T-bills to be a safe bet among the global equities that are crashing all around them.
They're seeking out a safe place to hold their capital until their confidence in global markets returns to normal levels.
This situation makes me think of people who nervously stockpile enormous amounts of water and canned goods when faced with the possibility of catastrophic events.
They want to be prepared, just in case their worst nightmares come to life.
But US T-bills are only a temporary fix, and some experts are wondering where that money is going to end up once the T-bills mature. In his article titled, "What's Going on in Gold," Alex Stanczyk states, "If the money flows back into equities, we may see a return to something semi-resembling normalcy. If confidence has been damaged to the point where that doesn't happen, I expect to see a good chunk of it flowing into gold and silver."
To those who are questioning the current drop in gold prices, I wouldn't worry too much. Stanczyk notes that gold is actually doing quite well these days, all things considered. In fact, the price of gold has been going in the same direction as the USD in most cases. Lately, when USD goes up, gold often goes up as well. Seeing that gold doesn't often follow this pattern, this is quite an interesting situation to watch.
In other gold news, an interesting fact that you probably don't know was shared with us in an article titled "Seeing Through the Panic to Profits" by Larry Edelson. He states that the Dow Jones Industrial is trading at an astonishing 77% below its recorded high level.
Sadly, it's true. According to Edelson, "Honest money (aka gold), has been devastatingly devalued in terms of the Dow Jones Industrial, and it's all because we no longer use 'honest' money for our currency and rely instead on ever-changing currency exchange rates that exist on nothing but a promise to pay.
Take a look at the history between gold and the Dow: In 1999, the Dow bought 44 ounces of gold. Currently, the Dow Jones buys under 10 ounces of gold. Hence the staggering 77% decrease in purchasing power.
Trust me, I know that the fluctuating trends in gold can be difficult to follow and truly understand. If you find yourself overwhelmed by what this information means to you and your investment portfolio, it may be time to turn to an expert to walk you through your choices and help you make the best decisions for your financial future.
About the Author:
Ron Wellman is the founder of We Invest Online, Inc., an Investment Concierge company specializing in high quality real estate investments and alternative investment opportunities for today's sophisticated investors. For more information on how he can help you make informed investment decisions, please visit his website at
www.weinvestonline.com
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Date Published :
Dec 30 2008