Today, August 8, 2011, the global stock markets continued their decline, hastened by Standard & Poor’s reduction of the U.S. credit rating. No longer are the experts discussing the improvement of jobs and the economy (despite the desperate pleas from the White House), but rather whether the economic slowdown will actually worsen.  The Dow Jones Industrial Average plunged 632 points, as a staggering $2.5 trillion (with a ‘T’) was erased from global equities. Treasuries rallied and gold surged to a record.

According to Bloomberg.com, “The S&P 500 Index lost 6.7 percent to 1,119.46 at 4 p.m. in New York, its lowest level since September. All 500 stocks fell. The Stoxx Europe 600 Index slid 4.1 percent to extend a drop from its 2011 high to 21 percent. Treasuries, benchmarks of the nation’s $34 trillion debt market that is more than twice the value of American equities, rallied. The 10-year note yield fell as much as 23 basis points to 2.32 percent, the lowest since 2009, and the two-year rate slid to a record low.

During times of economic uncertainty, many investors seek the relative security of the Treasury market, investing in these government issued notes. Although the yield is quite low on such notes, they are nonetheless a guaranteed return.  However, as the market has shown, when many investors flock to such “secure” products, the yield can drop considerably.  As noted above, the yield on a 10-year note is now only 2.32 percent.

I understand that people are looking for a “safe” vehicle for their hard-earned dollar. Given the fact that the dollar has decreased in value over the years, however, I cannot understand why people are so willing to invest in Treasury notes that provide an almost non-existent yield. Inflation alone will completely eat away any nominal gain that these low percentage rates might offer. Instead of trading the declining dollar for a note which is arguably a very minor improvement, it would seem to be a wiser investment of one’s money to choose precious metals instead. Both gold and silver have consistently increased in value as the dollar has decreased in value. In fact, since 2002, the U.S. dollar index has lost 20% while, during this same time period, gold has gained more than 300%.  There are those who speculate that silver will ultimately outperform gold.

I don’t think anyone believes that it would be a mistake to invest in gold and silver as opposed to taking a chance on the stock market.  That being the case, why do people settle for insignificant “gains” on Treasury notes when they could invest in gold and silver?  People need to research the facts themselves, as opposed to relying on the advice of “experts” whose livelihood depends upon steering clients toward investments that will boost their commissions.

Maybe some people think that it’s too hard to invest in silver and gold.  I’m happy to say that nothing could be further from the truth.  In fact, there is a way to invest in silver and gold assets and get paid for doing so.  Sound interesting? Click here for more information.

Given the uncertainty of the times, we need to change the way we do business and change the way we invest. Otherwise, we will all continue down a path of financial distress.

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