Decline in World Trade Another Indicator of Slowing EconomyPaul-Martin Foss
Every day seems to bring more and more news of headwinds facing the economy. Now international organizations are warning that global trade growth is slowing, an ominous indicator that the world economy continues to slow.
Earlier this year, analysts at the World Trade Organization (WTO) forecast a 2.6% increase in world trade this year. Now they’ve cut that forecast by more than half, to only 1.2%. And there’s every indication that the trend now is for world trade to begin declining in early 2020.
World trade is being buffeted by a whole host of forces, from continued uncertainty surrounding Brexit to the continuing trade war with China. And despite all the promises that there will soon be a deal with China, more tariffs on Chinese imports are set to come into effect in early December, something that will undoubtedly weigh even more heavily on world trade.
Throw in the ongoing crisis in Hong Kong and the effects that a Chinese crackdown would have on world trade, and there just doesn’t seem to be any end to the possible factors that could upend the world economy. For investors who hope that the stock market growth we’ve seen the past few years will continue, there’s not much reason for optimism, given the worsening trade outlook.
That’s one reason so many investors have begun looking to gold, as the prospect of economic turmoil makes gold an increasingly attractive investment option. Whenever stock markets look like they’re on the verge of crashing, or economies look like they’re on the verge of recession, the smart money moves into gold.
As we saw in 2008, gold made great gains while stock markets tanked, and continued those gains for years afterward. We’ll see the same thing during the next financial crisis, with gold likely to break its all-time highs once stock markets really turn south. But only those investors who invested in gold before that crash will benefit. Those who sit on the sidelines could very well lose half their wealth, as many investors did in 2008.
Don’t be one of those investors wondering what could have been, as your 401(k) loses more than half its value during the next crash. Start thinking about investing in gold today, while you still have time to protect your retirement savings.