Oil was also up, following reports that US reserves dropped by 2 million barrels. On the other side of the divide, gold declined for the fifth day in a row, due mainly to the prospects of interest rate hikes and the wider positive sentiment about the US economy. Although it is still too early to tell if the economic indicators are supporting the positive sentiment in the market, investors seem to feel more confident. However, it is too early to party.
Just last week, George Soros, one the most iconic investors of our time, declared that the world economy is not looking healthy enough. He made a move for gold, as a result of that assessment. Today it seems like the wrong move, but savvy investors have an exceptional ability to make their moves, based on longer term calculations.
The obvious conclusion is that volatility in the markets is the only constant that can be trusted. It is a time for caution, because whatever goes up today can come crashing down tomorrow. Data can be interpreted in several different ways. This means that if the increases on residential real estate sales are a positive sign to most, they might be signaling the opposite, especially when coupled with reports about increasing private debt in the US, and a seemingly inevitable hike in interest rates. Investors should be very cautious about the junction that the world economy is at, at this point in time.
