NO NEED TO PANIC WITH FALLING COMMODITY PRICES

With today’s news of falling gold and silver prices investors don’t need to panic. Many investors think gold will drop when the stock market does and vice versa .But while the S&P continued to decline, gold took a hop and ended the year up 5.5 percent. Over the total 18-month stock market selloff, gold rose more than 25 percent. The thing we need to notice is that, even if gold initially declines along with a stock market collapse, people should not think it is down for a count. In fact, history says it might be a great buying opportunity. The reason gold ends out to be spirited during stock market crashes is that the two of them are inversely related. In nut shell, when one goes up, the other tends to go down. With the today’s news of fall down of prices of gold and silver it is likely to assume that the price of stocks will eventually decline. Over the two decades from 1980 to 2000 the price of bullion dropped from $850 to $350 an ounce. Still, the S&P 500 index goes up to 1000% (according to data from Yahoo Finance) which is more than 10-fold increase. Like other investments the price of gold and silver changes day by day. However, those price changes don’t actually change the value of stocks at a higher extend. Though if it does, then this change does not effect in long run to the investors.

 

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