Dow Reaches 14,200. Economy Still In Trouble

The Dow Jones Industrial average hit a new all-time high today of 14,200. Does this matter? Is it cause for celebration? Forgive us here at GoldWatch, we’re not celebrating.

Why? The Dow is only a weighted average of 30 stocks, hardly a reflection of the true economy. Consider these scary factors as well…

  • When the Dow hit its now old record high back in October 2007, the economy was still in good shape. Unfortunately just a few months later was the beginning of the Great Recession…
  • According to the FRED Database at the St. Louis Federal Reserve, the unemployment rate in October 2007 was 4.7%. In January of 2013, the unemployment rate was 7.9%.
  • Back in October 2007, debt was only about 65% of GDP. Public debt as a percentage of GDP is over 100% right now.
  • Figures from the government last week showed that GDP in the fourth quarter of 2012 rose just 0.1%, compared to a 3% rise in the third quarter of 2007.
  • Real estate is still in a bear market. The S&P Case-Shiller 20-City Home Price Index, a widely watched gauge of the health of housing, is still 24% below where it was in October 2007.
  • U.S. Debt is over 16 TRILLION dollars.

So let me put things in perspective: The job market is still considerably worse than it was in October 2007. The economy is barely growing. Housing prices have not come back. The federal government is much more heavily in debt.

Does this seem like reason to celebrate? No. There are much more reasons to be worried than excited about what is next for the economy.

Given that Republicans and Democrats are showing no willingness to come to a compromise and work together, is there any reason to believe that they can stall a government shutdown later this month? Or that they will be able to put together an agreement on the budget before the debt ceiling needs to be raised once again in mid-May?

Probably not. For this reason we can’t stress enough that readers should prepare for the rough waters ahead with the proven safety of physical gold.

Since October of 2007, gold prices have increased over 113%! With the Fed continuing its course to purchase $85 billion of bonds every month and keeping interest rates near zero, its no surprise why many are taking advantage of the modest pullback in gold prices.

According to Macquarie Research, for every $300 billion expansion in the balance sheet of the U.S. government, there is typically a $100 an ounce increase in the price of gold. When you factor in the Fed’s current bond purchases totaling $85 billion per month for the next nine months, the central bank will be adding $765 billion in new assets. That would equate to a $255 an ounce increase in the gold price! By this measure alone, gold is set to rise approximately 16 percent over the next several months.

Call Capital Gold Group at (800) 510-9594 today and find out how YOU can add gold to your portfolio!

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