The gold market these days testifies to the government’s success in confusing investors.
Posted by Adam King on May 18, 2011
The time to save yourself with gold investments may well be running out.
May 18, 2011 – The gold market these days testifies to the government’s success in confusing investors. It may not be a conspiracy, but the snow job cannot be a mere accidental product of ineptitude.
For the past several decades spin doctors have been perfecting their trade, making it very difficult for the average American to understand what is really going on. But people are beginning to see through the fog.
A recent survey by Rasmussen Reports shows that 63% of adult American consumers believe we are in a recession, but more surprising, 62% of investors also believe it. Still the government keeps trying to sell us on the “recovery.”
The latest data, for instance, trumpets a 0.9% increase in retail sales in March and a 0.5% increase in April. On the surface, that seems to be encouraging since consumer spending is around 70% of the GDP. But those statistics are based on dollars spent, not quantity of goods purchased (and therefore produced).
For example, “March’s jump was helped in large part by a surge in gasoline prices,” says Irwin Kellner in MarketWatch. “While motorists were pumping fewer gallons, the dollar value of gasoline sales rose 4.1% in the month.” Likewise a 0.6% drop in actual consumption translated into a 2.7% increase in dollars spent. Obviously spending more for less does not constitute economic growth, and consumers, once content in blissful ignorance, are beginning to take notice.
David Weidner in MarketWatch believes the seemingly contrary markets today are “not unlike the economic trends we saw in 1988, 1999 and 2003: Most investors believe we’re in the early stages of a global recovery, and they’re going to bet on it whether it happens or not … [The current] rally is based more on confidence than any actual data.”
“The point is that as surely as a lack of confidence knocked over the house of cards in 2008, confidence, or overconfidence, may be building a new one in 2011,” Kellner says.
As investor awareness grows, that house of cards will also come tumbling down. The time to save yourself with gold investments may well be running out.
Stewart Lawson
Senior Staff Writer – Certified Gold Exchange
Categories:
US Gold Market
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