Home > Economic Update > “Bear Market returns – Hold on for a Huge Market Drop.”

“Bear Market returns – Hold on for a Huge Market Drop.”

“Bear Market has Started.”

What’s been happening in August 

The recent events on the Global financial markets are enough to make anyone cautious, however with fear, for some there also comes excitement. I have to say I am excited about the opportunities it gives us as traders.

It is clear to see that there is more bad news than good news out there, but we can turn bad news into good news by using it as an opportunity to create profits. The writing is on the wall – at least you guys have been made aware of it ahead of time and can be prepared.

Europe’s manufacturing produced a reading below the boom/bust level of 50, it came in at 49.0 which shows a contraction in their manufacturing.
The U.S. manufacturing data came out too, it barely escaped running into negative territory with a reading of 50.6, which is lower than the last reading of 50.9.

Give it one or two more months and they will join Europe with their negative manufacturing readings. This is just one more sign that they are  heading into a recession and that Europe is “leading the charge”.

When GDP is slowing down consistently and manufacturing is slowing down consistently, how can you get an outcome other than a shrinking job market? That’s exactly what was confirmed last Friday with zero job creation in August. Unemployment is  at 9.1%  but that’s about to change too.

It takes a good 150,000 to 200,000 jobs created each month to start to bring the unemployment rate down. Well, if they are not hiring people, it won’t take long for that to start skyrocketing up quite quickly. Now that more people are realizing that gold acts like a currency, as a true store of value, the uptrend in gold has accelerated since the financial crisis of 2008.

Gold is benefiting from the crisis in the two most important fiat currencies in the world: the dollar and the euro. There’s an ugly contest going on between those two major currencies, and nobody can tell which country’s problems are worse.

In Europe, the sovereign debt crisis is now spreading further, to countries such as Italy and Spain. Meanwhile, the U.S. seems to be heading to another recession, which will give the Federal Reserve reasons to do what they do best-  print more money.

It is no surprise that gold keeps marching higher. Gold is the alternative currency that rises when the two most traded currencies in the world suffer.

The Euro and the US Dollar make up 87.3% of global Forex reserves, which means central banks around the globe hold most of their assets in those two currencies.

Check out what the chart is showing us. The long term trend on the Dow Jones has been broken at what is called the “Dead cross” where the 50 Day Moving Average has crossed below the 200 Day Moving Average.


Categories: Economic Update
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