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October 20, 2009

October 20, 2009 – Gold and silver prices decreased slightly on Tuesday morning, along with the majority of our nation’s markets. The Dow Jones Industrial Average (DJIA) recorded a 0.6% loss as of 3pm EST, and the Nasdaq index registered a mild decrease as well. many corporations have released their third quarter earnings reports this week, and even these minutely positive numbers were not enough to spark buying among stock investors. Blue-chip economists blamed today’s disappointing stock performances on the fact that many corporations’ profitable earnings reports were only profitable because of extreme cost cutting measures that were taken during the third quarter of this year. DuPont, Phizer, and United Health Group are amongst the companies who were forced to jettison weight in order to stay afloat during the previous fiscal quarter. Companies have been forced to cut their workforce, downsize their operations, and eliminate overhead to produce profits for share holders. These companies’ executives can only slash costs so much, and many economists fear that all cost cutting measures have been exhausted within the last three months. These same economists expect our nation’s upcoming holiday season to be abnormally slow, so stock indexes and individual stocks could be subject to further devaluation in the very near future.

In addition to the lack of viable cost cutting options, and the unseasonably cold season that awaits our nation’s retailers, stocks could also pull back significantly due to the lack of interest in new homes. Construction companies, building suppliers, and other companies that are tied to our dismantled housing sector could also lose significant value over the next two years. Share holders in those types of companies should be aware that home builder sentiment is down, and home buyers now have less incentive to purchase a home than ever. Our government’s $8000 tax credit for home buyers ends at the end of October, but it would be almost impossible for any new settlements before the rebate expires. Investors who want to balance their portfolios to prevent tragic losses are encouraged to diversify into gold and silver, whose safe-haven status has added valuable protection to the portfolios of many Americans during the last three years. 

Shannon King

Senior Staff Writer – GoldSilver.org

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