Gold Ramifications to GDP slowing -2.9% in 2014
In most cases, with the more economic and geo-political concerns in the world money traditional monetary investments are perceived to become more risky causing a percentage of money away from stocks and to lower risk or lower beta investments. With the new “revised” announcement of the (-2.9%) “real” GDP rate for 2014 has decreased; the global investor anxiety level has increased more than normal.
Classic Deflation
Deflation causes people to hoard money since they are thinking, “why buy it now when it will be cheaper in the future.” To counter, the FED will try to use monetary mechanisms and tactics to lower interest rates to keep the money supply moving.
The FED Problem with slowing Negative GDP
The problem is the Fed Funds rate is already between 0.05 and 5/15th on 6/25/14. In other words, the Fed Funds rate almost at zero leaving the Fed very little room to react to this new development.
The Good News is…
Housing prices are up as well as May housing sales. Plus, net person income is up 0.2%.
Back to the bad news….
New mortgage applications are starting to dip and refinance applications are down 75% since May of last year.
Some Mutual Fund Companies offer Negative Beta Funds
Contact mutual fund companies who offer “negative beta mutual funds.” These funds are designed to move in the opposite direction of the market. If you think this is the top of the market, you may want to start looking for options at MutualFundDirectory.org.
How does Gold come into play?
It stands to reason, money flow into gold at should happen at an increasing rate. However, buyer beware! We are in somewhat uncharted territory and there are many moving parts. Like the sign says at the ocean on a hot and gusty day, “Enter at your own risk.”