Where Should You Put Your Money?
Stocks dropped again today at the end of the seession – down another 189 points. We haven’t seen this much of a sustained multi-day drop in stock prices in a very long time. Do you remember when the DOW broke on the upside each of those 7000, 8000, 9000, and then 10,000?? That happened very fast – it looks like it will be faster on the way down.
Bonds got clobbered today as the FED was screwing around with the Bond Market by reducing interest rates, and having some unexpected auctions. Sort of screwy, but this caused great nervousness in the bond market – hence the increase in interest rates.
The Dollar fell a little; oil and gasoline fell a little too – with oil hitting a near term low.
Gold continued its ramp up in price, and is now over $900 – so this is a cautious buy at this price.
In the news today….
The FED surprised all the markets today by dropping the FED Funds Rate by 0.50% in concert with all the major Central Banks. You can see that all the rest of the world is scared to death with what’s happening in the financial markets – because they went along with the FEDs leadership. Normally they don’t. I consider this action VERY telling. This brought the Prime Rate down to 4.50%.
The FED gave another $37.8B in addition to the original $85B it loaned to AIG when it took it over. This is another case that the FED didn’t know how bad AIG was when it took its original action, and is now being surprised by REALITY.
September retail sales (surprisingly to me) were up 1% – much less than the 1.9% expected by the economists. I expected this number to start turning negative.
Tonight’s Dinner Conversation….
So where are people putting their money around the world today?? This is a very important topic to ALL economyguy readers – so listen up.
Cash in the form of US Dollars appears to be important.
US Treasuries are being hoarded by all banks around the world, and being held onto like death. This demand for Treasuries encouraged the FED to offer up some new Treasuries today – and they were snapped up – especially by foreigners.
Gold is the world’s “safe haven” – whereas it is normally US Treasuries. Someone in the Middle East bought up the world’s supply of Krugerands – so don’t try to buy any. The US Mint has stopped minting 1/2 and 1/4 ounce Golden Eagles BECAUSE the DEMAND IS TOO GREAT!!!!!!!!!
What does this mean for you personally??
Here are Today’s numbers:
Dow Jones 30 Industrial – 9258 (down 189 points)
10 Year Treasury Bond – 3.72% (up 0.21%) – bonds got clobbered
Euro – $1.3658
Gold – $907 (up $25)
Oil – $89.95 (down $1.11)
Gasoline – $2.03 (down $0.03)