What Falling Gold Prices Mean To You

If you are worried about your financial future, the reason gold prices are falling may frighten you. They are falling because European banks anticipating defaults in Portugal, Ireland, Italy, Greece and Spain are selling gold to raise desperately needed cash. While some giant hedge funds are selling to meet bank margin calls on the declining value of their portfolios and some large investors are selling to cover stocks and other parts of their portfolios that are dropping sharply.

Last week global stock markets fell hard. The Dow Jones Industrial Average plummeted 6.4%, its worst week since the markets nearly collapsed in October, 2008. While gold on Friday had its biggest one day drop in five years, losing 5.8% of its value measured in U.S. dollars to close at $1,637.50. For the week, it was down 9.6%, gold's worst performance since 1983.

Global economic leaders are warning of a a financial "Red Zone," but they don't have the tools left to do very much about it. While in South Korea, where the economy has been strong, the government closed seven deeply troubled banks last week. Panicked depositors swarmed those locked branches to angrily demand their money. Their government will reimburse their losses up to 50 million won ($42,900) but some savers will suffer shortfalls and it sets the tone for fearful savers to trigger bank runs on other South Korean banks.

Like the 1929 Market Crash, events are beginning to overwhelm government officials and a global Depression is coming. So if you haven't already done so, please protect yourself. Slash your overhead by paying down your credit cards if you can afford to, sell unnecessary costly items such as an extra car or a boat and cross train at work so you become more valuable to your employer. And to the extent you can, be giving to those in need, for this is how people got through the last Depression in the 1930's and it is how we will endure this one.

Dick
To learn more, please see: "Market Rout Claims New Victim: Investors Dump Gold, Silver to Pay for Losses; All Eyes on IMF This Weekend," The Wall Street Journal http://online.wsj.com/article/SB10001424053111903703604576589210888153064.html, "Economic Leaders Warn of a 'Red Zone:' Ammunition to Tackle Crisis Largely Spent, Finance Ministers, Central Bankers Face Lack of 'Clear, Coordinated Position,' " The Wall Street Journal http://online.wsj.com/article/SB10001424053111904563904576588830101878562.html and "Depositors Swarm Korean Thrifts," The Wall Street Journal http://online.wsj.com/article/SB10001424053111903791504576588453692287010.html