Which Sector Will Be the Next to Burst?

FOCUS FYI BUSINESS DATA & INFOGRAPHICS BY FOCUS.COM WHICH SECTOR WILL BE THE NEXT TO BURST? GOLD IS A "CRISIS HEDGE" WHOSE VALUE HAS INCREASED 300% IN THE LAST DECADE $1000 HISTORICAL PRICE OF loz OF GOLD $800 $600 $400 $200 SOURCE: Wren Research $0 In times of great uncertainty and fear people want to invest in something that they can physically store and transport. Gold is also appealing because it is an asset without being someone else's liability. However, gold generates no income, and its price is dictated only by what others are willing to pay for it. EXCHANGE-TRADED FUNDS 800 Exchange-traded funds are financial products designed to help investors invest in a wide variety of mutual funds relatively easily. Once well-regarded, many opportunists are flocking to the industry. In 2004 there were 152 ETFS, today there are nearly 760. Many fear ETFS will quickly become as bad as the products they were meant to replace. 700 600 500 400 300 200 100 EMERGING MARKETS The emergence of Exchange-traded funds, or ETFS, has caused a lot of money to begin to flow into emerging markets. Many markets, like those in Brazil and Peru, have increased dramatically, reaching nearly 100% increases. Some investment advisors indicate that such an increase means either something has changed dramatically, or the value has been inflated. COLLEGE TUITION College tuition has increased at 3 times the rate of inflation for the rest of the economy. $10, For most $10, commodities which could have been $8. $8. purchased for $1.00 in 1978, the same commodity could be bought for $3.30 today. $6 $6 $41 $4. However for college tuition, you are paying $10 for what $2 $2. would have been $0 $1.00 in 1978. $0 COPPER Many fear that because of the United States' recession, the decrease in construction would cause a drop in the demand for copper. However, in 2009 the price of copper doubled. CHINA Shanghai's Pudong district had a 57% rise in housing prices in just a few months There is currently a housing bubble in China that is comparable to the housing bubble that was a catalyst to the American recession. There is also fear that China is acquiring loans made for political purposes rather than economic ones. TREASURIES Recently banks were given a $700 billion dollar bailout aimed at helping failing banks lend money to consumers. However, many of these banks are instead using the bailout money to buy Treasury bonds. MONTHLY CLOSING PRICE 20+ YEAR TREASURY BONDS 120 DEC 1, 2008 0 100 80 60 STOCK TICKER: TLT 40 2002 2010 Because many U.S. Treasury bonds are owned by foreign countries, if the bubble popped it would cause those countries to begin selling off their treasury bonds. Economies across the globe would be affected. 2008 2000 1990 1980 1970 1960