According to The Economist, there are still six global real estate markets that are more than 30% overvalued. Australia shows the largest overvaluation at 61.1%, followed closely by Hong Kong and Spain. What happens when these market values return to fair value? Frightening. … [Read more...]
Gold, Silver, and Currencies
Young Research & Publishing has been providing research and insights on precious metals and currency markets to institutional investors, corporate financial officers, business owners, and individual investors for over four decades. Richard C. Young started Young Research & Publishing in the 70s to publish the authoritative Young's World Money Forecast, a 50-page monthly investment report on the precious metals and currency markets. Today, our research on gold, silver, and currencies is geared toward investors in or nearing retirement who are looking to preserve and protect wealth.
Avoid Australian Equities?
The correlation between Australian stocks and Chinese stocks is near a record high. If you are bearish on China, you probably want to avoid Australian equities. … [Read more...]
Dow Industrials vs. Gold
In the last 115 years there have been three secular bull markets in gold versus the Dow. The current secular bull market in gold is the third. In each of the last two gold bull markets, the ratio of financial assets to gold fell to a ratio of less than three. The current ratio of the DJIA to gold is 8.3. Based on historical precedent the secular bull market in gold still has a ways to go. At the extremes, before this bull market is finished, gold could rise to over $5,000 per ounce or the Dow could fall to less than 2,500. … [Read more...]
A New All-Time High
A $1 trillion dollar bailout of overly indebted euro-area governments has helped push gold to a new all-time high. The bailout in Europe greatly diminishes the credibility of the European Central Bank and the euro. Investors are rightfully fed up with paper money. The only credible alternative to paper money is of course gold. How much gold do you own? … [Read more...]
A Wake-up Call for Investors
The Dow Jones Industrial Average fell more than 5% this week. Up until this past week, U.S. stocks marched higher despite the increasing risks of a government debt crisis in Europe. This week’s sell-off indicates investors may finally be waking up to the significant headwinds the global economy still faces. If the debt crisis in Greece spreads to other Euro-zone countries, it would wreak havoc on the Euro-zone economy and neighboring countries as well. The global economy would also be impacted. The Euro-zone economy is almost the same size as the U.S. economy. If Europe dips back into a … [Read more...]
If Greece Fails, is Portugal Next?
Greek government bond yields have surged to over 16% in recent days. If Germany doesn’t step into to save the Greeks, a default is not out of the question. But the larger problems for Europe are the risk of contagion. Bond yields on other overly indebted euro-area countries are now surging. Portugal is the market’s next target. Yields on short government debt have surged 230 basis points in a matter of weeks. … [Read more...]
Euro Breaks Through Key Support
Euro breaks through key support level. Next support level will be reached somewhere between $1.25 and $1.30. A weaker euro lessens the probability of an export-led recovery in the U.S. … [Read more...]
Pop Quiz
You’re right if you guessed that the largest stock fund is an exchange-traded fund (ETF), a fact I always find somewhat surprising when studying the list of the largest stock funds in The WSJ’s monthly fund report. The one at the top of the list is the SPDR S&P 500 ETF (SPY), with $91.11 billion in assets. When I first started working in this industry, back in 1995, Fidelity Magellan was the largest stock fund. It was an actively managed fund, so it was a big deal when it was surpassed by Vanguard’s Index 500, a passive index fund. With the index fund, investors knew what they owned, … [Read more...]
A Threat to Global Economic and Financial Stability
January 29, 2010 There is an emerging real-estate bubble in China. Ultra-loose monetary policy in the U.S. and an over-the-top stimulus plan in China, coupled with a pegged yuan, have created optimal bubble conditions. BusinessWeek reports that in Beijing's Chaoyang district, a typical 1,000-square-foot apartment sells for 80X the income of the average resident. Sound troubling? The Chinese leadership is concerned. Monetary policy is being tightened, and the government is reimposing a tax on home sales. A hard landing for the Chinese real-estate market is a real risk to global economic and … [Read more...]
Investment of the Decade
Trust has been kicked to the curb by Washington and Wall Street. Not a smart move, as the former prepares for mid-term elections and the latter feels the effects of investors voting with their feet. Many clients and brokers have fled the big Wall Street firms for independent advisors. Washington and Wall Street may realize too late that trust is a terrible thing to waste. The bailout of Bear Stearns, Lehman's bankruptcy, the controversial merger between Merrill Lynch and Bank of America, and Citigroup's near collapse had little to do with their client brokerage accounts. In fact, brokerage … [Read more...]