REVEALED: The SIX signs world COULD be heading for the next global financial CRASH Wednesday, November 21, 2018 By Paul Martin
IT has been 10 years since the Lehman Brothers investment bank collapsed in September 2008, sparking the global financial crisis as Wall Street was plunged into meltdown.
By LEVI WINCHESTER Express.co.uk Wed, Nov 21, 2018
The International Monetary Fund (IMF) warned of “large challenges” ahead “to prevent a second Great Depression” in a report released in October.
But is the world really close to the next financial crash?
The economy is typical unpredictable but there are several factors in recent months which have sparked particular volatility in the global market.
Here Express.co.
uk looks at some of these variables and what they could mean for the world economy.
PRICE OF GOLD:
Adrian Ash, head of research at BullionVault, said there is a correlation between the price of gold rising when the stock market is underperforming.
The price of gold in British pounds has rocketed by 23.
74 percent, or £5.87 per gram, over the course of five years, according to online dealer bullionbypost.co.uk.
In terms of the euro, the price of gold has gone up by 16.
63 percent over the last half a decade, with a change of €4.93 per gram.
The picture is not so positive for the price of the yellow metal in US dollars, with the cost plunging by 1.86 percent over five years to be down $0.75 per gram.
This week has seen the price of gold in US dollars inch up on a weaker currency, sparked by concerns about global economic growth.
For UK investors and savers, gold’s gains since the start of October mirror the 7 percent drop in the FTSE almost exactly, Mr Ash explained.
He told Express.co.
uk: “This could be a warning that years of stock-market losses lie ahead.
“Gold tends to do well when other assets do badly, most especially the stock market.”
He said: “What really counts for gold prices is investment demand, where money comes into the bullion market from other asset classes, seeking safety.
“That’s what drove prices higher during the DotCom Crash and then the financial crisis.
DOW JONES:
The Dow Jones Industrial Average has fallen by almost 1,000 points over the last two days alone.
In fact, October 2018 was among the most volatile months in 118 years for the US stock index, Fox News reported.
But why is the Dow Jones so crucial to the wider global market?
The Dow Jones is price-weighted, meaning stocks with higher share prices are given a greater weight in the index, according to investopedia.com.
Goldman Sachs chief US equity strategist David Kostin said to CNBC: “Put simply, stocks have already started to price in the risk of an economic slowdown.”
Kane Thomas-Mason, a trader with Spreadex, told Express.co.
uk: “From a technical perspective the recent double top suggests that we might see a short term down trend and prices don’t look set to break the resistance level around the 26700 mark.
“In addition to this, the majority of technical indicators, including the RSI and MACD, are offering strong sell signals.
However any progress in trade talks between the US and China at the G-20 summit in December could see a trend reversal and prices climb above this point, according to Ms Thomas-Mason.
She said: “The results of this meeting between Trump and Xi will be key and could have a great impact on markets globally.”
CRYPTOCURRENCIES:
Bitcoin was worth more than $14,000 in January but since then, digital assets have lost close to $700 billion of their market value.
This week saw Bitcoin plummet to $4,385.52, marking the first time in more than a year the cryptocurrency has dropped below $5,000.
The cryptocurrency’s decline has also caused BTC rivals including Ether, Litecoin and XRP to join the decline.
Nigel Green, founder and CEO of deVere Group, claimed the fall in Bitcoin and other cryptocurrencies could have a wider impact on the global market, with a fall having the potential knock-on effect on stocks.
He told Express.
co.uk: “This turbulence is likely to have a wider effect on global stocks as cryptocurrencies are alternative assets.”
Mr Green blamed the decline in cryptocurrencies on a combination of uncertainty regarding the Bitcoin Cash hard fork and the growing regulatory scrutiny in the US.
However, he maintained the future is still positive for Bitcoin as he described the cryptocurrency as “the future of money”.
He added: “This was then exacerbated by some investors following ‘the herd’.
“Bitcoin has made-up some of its losses on Wednesday. Whilst it remains unclear if the floor has been found, a long-term upward trajectory for the wider crypto sector can be expected.
“Indeed, the market, I believe, will reach at least 5,000 percent above its present valuation in the next 10 years.
“Why? Because investors know digital, global currencies, in our digitalised, globalised world, are the future of money.
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