The global economy is looking shaky and some of the biggest economies around the world face up difficult times. The United States, the world’s largest economy, is having its slowest economic “recovery” since World War II. China, the world’s second biggest, is growing at its slowest pace since 1990. By the other side, Brazil with all the scandals involving politic leaders and corruption that came up through the news during 2015 and 2016 is having moments of instability and even an impeachment wave against the actual president Dilma.
Did you know that Gold has now climbed 21% since hitting a seven-year low in December 2015? According to the mainstream definition, a bull market starts when an asset rises 20%. Checks this fact: Investors plowed $7.8 billion into gold exchange-traded funds (ETFs) last month (Feb, 2016) making this an all-time record, according to Barron’s.
So, what’s causing this rush into gold? Gold is money. It’s a safe haven asset that’s held value for centuries. It’s protected wealth through the worst financial crises in history. In short, investors buy gold when they’re nervous. And there is plenty to be nervous this time, during the rest of this year 2016, and very possible, still during 2017. Stock markets are struggling this year. The S&P 500 has dropped 1%. The tech-heavy Nasdaq has fallen 5%. The Stoxx Euro 600, which tracks 600 large European stocks, has fallen 6%. The Japanese Nikkei 225 has dropped 7%.
The conclusion is Stock Market still makes a fortune for some individuals and investors that can play the game, but it is more and more risk, while gold, let’s say, a winner.